Laura Hajovsky, JD, Huron Consulting Group
In today's economy, most law departments are being challenged to reduce costs quickly and to make those cost-savings sustainable. Initial reactions include asking for discounts from outside counsel, cutting travel budgets and eliminating unnecessary overhead expenses. Often, these types of actions only produce short-term savings.
The law department can create sustainable savings by taking actions that address the work performed by the department, by asking: Are we doing the right work and are we using the right resources for it? Through the process of reviewing the work actually performed by the law department as compared to work that should be performed by the law department, opportunities to shift work to other resources or departments may be uncovered. Shifting work creates capacity for the law department to perform more legal work internally.
1. Create criteria for legal involvement in Human Resources issues.
The Human Resources department is commonly staffed with highly trained professionals who often have a good grasp of the legal ramifications of the actions within their scope and what requires the involvement of Legal. Sometimes though, the parameters for what requires Legal are expanded unnecessarily. By working collaboratively with Human Resources, Legal can streamline the HR-related work that it is involved with to strictly those matters where legal issues are outside the scope and purview of Human Resources.
2. Simplify contract language to reduce law department review.
Contracts is an area where the law department can quickly impact its workflow by introducing forms, templates and self-service kiosks. But for these to be effective, the end user must be able to understand what the contracts say. Using less legalese and more "plain English" will make the forms and templates user-friendly. The simplified forms and templates combined with training on terms and use will positively impact the demands on the law department's time on an on-going basis.
3. Create trademark standards to define necessity for preliminary searches.
Trademark searches cost money and consume attorney time. You can reduce the number of searches needed by establishing standards for when a trademark may be viable and a search is needed, and educating clients on those standards. The standards should include information regarding the level of uniqueness required in determining whether something can be trademarked, the ability to use a domain name, and the scope of use (e.g., limited or broad, regional or global). With proper standards in place, the company may choose to have marketing perform any preliminary searches before sending to the law department for legal review. Standards should be balanced with the increasing duty to perform pre-application searches and the goal of reducing infringement risks and associated costs.
4. Limit IP assertions and offensive litigation to critical misuse.
IP litigation is expensive. One area that can be controlled is offensive litigation. Attorneys are trained to go after infringements and protect the company's rights. However, litigation may not be the proper course. Before pursuing litigation, a business analysis should be conducted to determine the revenue impact of the misuse and if a lawsuit will support the business strategy. It is critical to involve the business team in the decision to pursue misuse of a company's IP so that the decision is aligned with their strategy.
5. Apply cost-benefit concepts to litigation to determine fight or settle strategy.
While it is always nice to "win," fighting a case all the way through the trial and appeals process does not always make financial sense. At the outset of a litigation matter, it is important to compare the costs of pursuing the matter through trial with the benefits that would be derived. In cases where the benefits do not exceed the costs, you may determine that settlement should be the focus of the case strategy. By applying cost-benefit analysis to case strategy along with input from internal business clients, you can make a determination as to whether it makes more financial sense to settle a matter quickly as opposed to drawing it out in a lengthy trial process.
6. Assign low value/low risk contracts to non-attorney resources.
Low value/low risk contracts typically involve recurring legal issues. With the introduction of forms or templates to streamline the contract process, and provision of training on the company's legal positions in contracts, low value/low risk contracts can be assigned to professional non-attorney resources skilled in contract drafting and negotiation. By shifting this work to non-attorney resources, the internal contract attorneys will have more time to focus on higher value and higher risk contracts. This will likely create opportunities to handle in-house some contract work that had previously been outsourced to outside counsel, creating a measurable cost savings.
7. Outsource immigration work to non-law firm vendors.
While it is critical for immigration work to be handled by someone with the appropriate expertise, it is no longer necessary to go to a law firm to get this level of expertise. There are now vendors in the market that can handle immigration work such as visa planning, visa document preparation, and global workforce compliance. These vendors have the necessary level of immigration expertise to handle the majority of the immigration workload at a price point significantly lower than the hourly rates of a law firm.
8. Unbundle document review from law firm services.
Historically, document review has been bundled with other litigation work and sourced to a law firm. However, this operating model is no longer the most cost-effective way to complete the document review process. Like the vendors that handle immigration work, there are non-law firm vendors in the market today who can competently perform document review services at a significantly lower price point than the traditional review by a law firm. Often these vendors can provide their service on a per-page review basis, which also creates more cost predictability for budgeting purposes. Unbundling document review work from standard litigation work and sourcing this work to a non-law firm vendor can result in significant savings.
9. Consolidate employment litigation to a single outside counsel firm at a fixed annual fee or per case fee.
Consolidating employment litigation to a single firm at a fixed fee or per case fee can result in cost savings and increased budget predictability. Considerable economies of scale can be achieved by bundling all employment work to one firm – the arrangement allows the firm to become intimately familiar with the types of employment matters your company faces consistently. This in-depth knowledge typically allows work to be completed more efficiently. Sourcing the work on a fixed fee or per case basis (using historical spend as the baseline) allows for greater budget predictability both for the law department and the law firm handling the work.
10. Negotiate flat fees for predictable annual corporate work.
There is some amount of predictable corporate work that occurs annually for every legal department. SEC filings are an example of work that occurs consistently, every year. SEC filings and other predictable corporate work that occurs annually can be bundled together and sourced to a law firm on a flat fee basis. Law firms typically are willing to negotiate a reduced-rate flat fee arrangement based on a demonstrated level of historical work, resulting in both cost savings and cost predictability.
These ten ideas are not the whole universe of cost-savings actions that can be taken. But by committing to doing the right work, doing the work right, and thinking creatively, your law department can implement new ways to control costs in a sustainable manner.