There are many ways to reduce your legal costs in contract projects. However, you must know that the right strategy is more complex than restricting work to in-house attorneys and low-bidding law firms.
The best way to control legal spending is to be more holistic and think through each decision.
It means ensuring that the right expertise is available and that it’s the right match for the business impact and complexity of the work.
Streamline the Process
Streamlining the process is crucial to reducing your legal costs in contract projects. It involves removing unnecessary steps, adopting other methodologies or using new technologies.
The first step is assessing your current processes and workflows and identifying which could benefit from streamlining.
Once you’ve identified a few processes that need to be streamlined, determine which one will be the easiest and most effective. Then, assign a project leader primarily responsible for facilitating and ensuring they have at least one executive sponsor.
If you want to spend less on legal fees, taking advantage of specialized legal service providers like Intuitive Edge would be beneficial in managing your contract projects.
Invest in Technology
Investing in technology is one of the most effective ways to reduce your legal costs in contract projects. It can include new tools that allow your team to do their job better or improve the efficiency of their workflow.
For example, if your company’s lawyers spend hours searching for contracts, a solution that auto-exports data to a contract repository can save time and money. The solution also provides an OCR search and analysis feature allowing your team to find clauses and data points faster than ever.
In addition to improving the efficiency of your team’s workflow, investing in technology can help you win more business. For instance, if you’re considering competing for federal infrastructure funding, a technology-enabled platform that can manage the entire contract lifecycle from sourcing and negotiation to contract review and management will increase your chances of success. It could make the difference between winning and losing a deal.
Use Alternative Fee Arrangements
Alternative fee arrangements (AFAs) are a great way to reduce your legal costs in contract projects. They are becoming increasingly popular among lawyers and clients alike.
In addition to delivering more cost predictability, alternative fee agreements can align the interests of outside counsel and the contractor. They also ensure that legal spend is known up front and accounted for in the project budget.
AFAs also reduce disputes by limiting the need for extensive invoice review and encouraging more consistent billing practices.
Your legal-ops team must implement an effective invoice workflow if you want to benefit the most from AFAs. It can include using an e-Billing platform that tracks and enforces alternative fee arrangements.
Reduce Overhead
Overhead costs are the expenses incurred by your company to operate the administrative side of your business, such as rent, insurance, communications, office supplies, salaries and licenses.
Your overhead percentage should be less than 15% of total sales. However, this can be not easy to calculate, mainly if your expenses aren’t categorized correctly.
Creating standardized documentation and processes for low-level legal tasks that your firm’s business staff can handle is one way to cut costs. It can include routine procurement contracts, company and securities compliance filings and trademark renewals.
In addition, you can use AI-enabled contract review tools to automate basic document review for high-volume, low-impact documents like NDAs. It can help improve turnaround time and save you money.
Finally, it’s essential to monitor your overhead closely and ensure that your firm is spending what is necessary. For example, if your law firm’s marketing and recruiting expenses are skyrocketing, you should rein in those costs or reevaluate how you do things.
