Hope you and your family are faring well through these tough times. Hopefully we’ll get back to normal in the not too distant future.
Meanwhile, we wanted to share an update that may be helpful to you. Several of our clients have asked what we are seeing more broadly COVID-19 Legal Spending developments and strategies. Below are some key observations.
Preparing for Financial Impact on the Company. Faced with sharp reductions in sales and revenues, Leadership Teams are intensely focused on preserving cash and reducing expenditures.
Managing Financial Impact on Legal. General Counsel and CLOs are planning for revised budget targets for the remainder of the year. Strategies include thoroughly reviewing law firm budget and scope projections – increasingly with advanced technology tools – to ensure reductions from anticipated delays as courts, regulatory agencies etc. change schedules and due dates in their own efforts to adapt. Some are focused on reductions in specific matter budgets far beyond levels typically seen, approaching ranges like 40-50% or more.
Reviewing Pending Invoices. Many Legal Departments are reviewing pending invoices more closely, especially from firms who recently increased rates to levels that would be challenging to sustain in the coming months. Technology tools are increasingly helping with this process as well.
Revisiting Alternative Fees. Legal Leadership Teams are looking closely at law firm alternative fee arrangements, particularly those geared toward paying a certain amount per month, quarter or year. Their remit is to make proper adjustments to match material reductions in scope due to delays.
Seeking More Risk-Sharing Arrangements with Law Firms. To preserve cash and increase alignment, some departments are analyzing more outcome-based, risk-sharing arrangements with law firms. This applies in both the recovery and defense contexts.
Utilizing More RFPs. Legal Departments are increasingly looking at strategic use of RFPs and pre-assignment conferences in assigning new matters. Savings of 20-30% are common here.
Exploring Productivity Boosts. We are involved in more conversations about how Legal Departments can use levers like technology, Legal Process Outsourcing and alternative staffing models to achieve savings in the coming months. These apply to both internal Legal Department workflows, and law firm workflows that impact fees.
We hope you find this update helpful in navigating the challenges ahead. If you’d like to discuss any items in detail, feel free to reach out – we would be glad to.
Meanwhile, best wishes to you, your family, and your team for good health and well-being.