Legal Spend Management: Controlling Outside Counsel Costs

In 2024, cost control has become a primary concern for in-house legal teams, prompting a focus on effectively managing legal spend. Over a third of in-house legal teams anticipate an increase in legal spend, according to the 2023 State of the Corporate Law Department survey by Thomson Reuters. Eighty-five percent prioritize control over outside counsel costs, as reported in an article by LawVu.

Legal spend encompasses both internal and external expenditures. The report states that an average of 53 percent was allocated internally and 47 percent of legal spend was allocated externally in 2023. Managing outside counsel comes with an administrative burden, contributing to the need for efficient legal spend management. Significant time is spent on invoice review, negotiation, and manual management of invoices, which can be a hidden cost for legal teams.

However, legal work allocation is shifting from external to internal resources. Ninety-nine percent of legal teams also handle time-consuming invoice reviews internally. LawVu’s 2024 In-House Legal Technology Report found that 62 percent spend over an hour per day manually managing invoices, approvals, and spend reporting.

Effective management involves tracking, analyzing, and optimizing these costs. The goal is to eliminate inefficiencies, make data-informed decisions, and strike the right balance between in-house and outside counsel costs. 

Investing in technology is a solution to streamline workflows, increase efficiency, and enhance collaboration with outside counsel. One option is a legal workspace approach, which allows legal teams to achieve comprehensive oversight of all legal work, make informed budgeting decisions, and demonstrate their value to the wider business.