Using Legal Spend Metrics to Manage Outside Counsel

According to the 2025 Thomson Reuters’ State of the Corporate Law Department report, corporate legal departments face increasing pressure to control costs while delivering efficient legal services. That’s why legal operations teams are using legal spend metrics to gauge the success of cost control measures and manage outside counsel.

The report demonstrates that legal departments are at different stages of spend management sophistication, ranging from chaotic and reactive approaches to more optimized and predictive strategies. As corporations seek better financial control, legal operations professionals may adopt structured processes such as centralized rate management, competitive bidding, and performance benchmarking. Many are progressively refining their approach, implementing tools like requests for proposals and negotiated discounts while leveraging data to enhance forecasting accuracy.  

By analyzing trends, legal operations professionals can shift work between firms, enforce billing guidelines, and ensure compliance with cost-cutting initiatives. Some teams negotiate significant discounts, limit work to essential matters, and delay invoice payments to improve cash flow. Advanced analytics further allow them to identify high-spend cases and reallocate resources accordingly, ensuring cost-effective legal service delivery.

At the most sophisticated level, optimized and predictive legal departments use automation to review invoices, flag guideline violations, and enforce cost-saving measures. Diversity and inclusion initiatives also play a growing role in legal spend decisions, with legal operations professionals tracking law firm staffing demographics to align with corporate values. 

Using legal spend metrics to manage outside counsel will help legal operations professionals optimize budgets, improve forecasting, and report on law firm performance. Looking ahead, legal operations teams will continue to refine their financial oversight through stricter billing enforcement, automated auditing, and enhanced predictive analytics.