Dear General Counsel:

You face ever-increasing pressure to control and predict cost. Here are steps I suggest you take to accomplish this:

1. DETERMINE WHAT PROBLEM YOU NEED TO SOLVE

Are you trying to reduce risk? Reduce cost? Improve service to your internal clients? Gain a seat at the table? Protect your job? The problem for which you are solving drives what you should do. I’ll assume that reducing cost is high on your list and address the rest of my advice to that goal.

2. DECIDE HOW MUCH LAW IS ENOUGH

The fastest and perhaps easiest way to reduce cost is to do less law. Work with your clients to define risks and trade-offs; educate them on the cost of legal service. You may find that you can reduce your spend by not addressing every issue that comes your way. Impossible you say? If don’t decline to deal with some issues, are you doing your job? So all I am suggesting is that you more systematically decide where to draw the line. Of course, doing less law runs counter to other goals such as reducing risk or protecting your job. So make sure your executive peers are on board with your strategy.

3. CHOOSE THE RIGHT RESOURCES

For issues that really do require legal attention, make sure you choose the right resources. Build or buy is always a good place to start. If you regularly retain outside counsel for similar issues, consider pulling that work in-house. For work you keep in-house, decide if you can assign a paralegal or other professional instead of a lawyer. For work you send out, choose the firm wisely. Can you use a mid-tier national or strong regional firm instead of a high-end, big city firm? Can you identify your efficient law firms and send them more work? Can you can unbundle tasks, for example, use an LPO or managed review provider for high volume work?

4. MEASURE WHAT YOU DO

Get religion about metrics. If you do not use e-billing, start. If you do, remember that it is more than an invoice management system. Get a data analyst to review two years of outside counsel bills: assess which firms are efficient and allocate more work to them. Remember to include judgments, fines, or settlements when you analyze costs. And finally, don’t be satisfied because your spend is comparable to a benchmark group. Unless your peers rigorously analyze and manage their own spend, emulating them proves nothing.

5. GET MORE FOR LESS

The best way to lower cost is to work smarter. For all work – inside or outside – make sure you apply process improvement techniques, legal project management, the appropriate technology, and knowledge management. Ask your law firms how they improve process, use LPM, deploy technology, and rely on KM. You may learn a few tricks. If you don’t, you may well be working with the wrong firms. (As you consider firms, think about what managing partners must do.)

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As general counsel, your job is not just managing legal risk. It is also managing legal cost and scarce resources. If you can’t do that, others can.

Happy New Year