The 4 Elements of a Cost-Effective Legal Department
Controlling costs in a corporate legal department can seem increasingly challenging, especially within a growing business. While it is necessary to adequately protect and maintain the legal rights of the business, the legal and business strategies need to be well-aligned to ensure that legal services are effectively managing the IP portfolio. In this article, we’ll take a look at the different areas where, with a little optimization, the legal department can reduce costs.
1. IP Benchmarking
As a business grows, there may be coinciding growth of its IP portfolio. This can become challenging for corporate legal departments as each new IP asset comes with its own additional costs. Benchmarking can help legal departments to control the increasing costs of intellectual property protection within an IP portfolio. Effective benchmarking will require cross-team collaboration so the legal team will understand the value and influence of each asset both individually and as part of the portfolio.
Additionally, the benchmarking process can provide insights regarding the costs of IP protection within the market by comparing service providers and what competitors are paying for the same services. This ensures that a business is not overpaying for external legal fees and services.
2. Resource Allocation
If your legal department operates within a growing business, it can be difficult to control costs as you may need to hire new staff to support the legal work associated with business growth. This can also include a requirement for specialized legal counsel. For this reason, general counsel and legal departments should assess how different staff members are allocated between cases both by skillset and time. In cases where specialized legal knowledge is required, it may also be advantageous to consult with an external legal services provider.
A recent survey of legal professionals has also shown the potential for cost savings with the tools and technology used by the legal department. The cost of maintaining these resources can increase as your department grows, so assessing how these resources are used can help you understand whether they provide an appropriate return on investment for the business. More specialized legal tools can be prohibitively expensive for your business. However, if these tools could substantially improve the outcome of a legal case, it’s worth consulting with an alternative legal services provider (ALSP), which can provide you access to these resources without the exorbitant costs.
3. Outsourcing Specialized Work
When you understand how your internal resources are allocated, it can provide insights about the skillsets and resources that are more cost-effective to outsource. Whether your team is already handling a high workload or you need more specialized services for a short term project, outsourcing case work can be more advantageous for multiple reasons. The main cost advantage is that your legal team has access to specialists and additional resources without the obligation of hiring permanent staff or paying the steep costs for legal tools.
Certain cases may also require specialist support that can deliver indirect financial benefits to a business. For example, if your business has a growing IP portfolio, consulting with an IP specialist can allow access to an extensive network of legal resources, which can result in better IP protection, especially when it comes to tasks such as IP docketing or trademark searching. The benefits of outsourcing can differ greatly from business to business, so it’s worth consulting with multiple service providers to determine what is more cost-effective for your legal department.
4. Consolidate Resources
Depending on the current structure of your legal department and how the workload is managed, it may be more cost effective to consolidate legal work to be carried out by fewer team members and/or fewer external service providers. As a business grows, legal requirements can drastically change within a short timeframe, whereby your team and resources have to quickly adapt to suit immediate needs. However, this can mean your team members may have taken on legal work that isn’t best suited to their skillset, they may have outgrown certain resources and tools, and service providers may not be suited to your current legal case work. Conducting an assessment of how your legal department utilizes resources can reveal the potential for cost savings through consolidation.