Legal spend is a bit of an oddity in terms of the law of economics in 2015. Lawyers onshore are expensive due to the training, expertise and limited resource pool. Most companies have a well-defined legal team but when capacity is exceeded with retained staff, the common solution is to go to law firms and pay 5x on the resource unit basis. What other resource pool would a company pay 5x for on the overflow? This is not to bash lawyers. I am a lawyer and worked in firms for 10 years and appreciate the expertise and the industry. But in 2015 cash is king and not every task requires Super-lawyer. Many require just competence and predictability. Put another way, you would not want a carpenter whose only tool is a hammer.
Given this background, you can understand why an LPO business case is attractive. But that is limiting and not what businesses need today. Staffing in a better cost location is great but fundamentally it is a race to the bottom on cost. Contract Compliance & Optimization (“CCO”) offers something different in this space that is more able to drive the right business outcomes. What we call Negotiate to Execute focuses on the following:
- Transforming the legal processes so they are rule driven through playbooks and templates. This standardizes the approach to allow a company to look at its review of contracts based upon risk. Put another way, CCO can do a preliminary review of low risk contracts and allow the retained staff to review the sophisticated contracts.
- Ensuring the “right tool for the job” is applied. Companies don’t need expert 20 year experienced lawyer to review NDAs or perform preliminary reviews on low-risk, standard contracts.
- Implementing a process and discipline so legal services enable retained staff to more effective while preserving external spend for only acute needs and efficiencies.
- Shifting retained lawyers to strategic deals as many prefer to spend more time on risky issues as opposed to dealing with business as usual.
Look – we all want to cut costs. But to do that and get real benefits requires a process, a method and a vision. Yes, resources are less expensive in certain countries, but please don’t think that is the whole story. We are more than staff augmentation. We are not a law firm either and we can’t provide legal advice, but often we are the right tool for the job.