Imagine you just started a legal operations leadership position for a major multinational company.
Where do you start? And what should you focus on first?
Ideally, you’d like to show a tangible return on the investment the company is making in legal ops. How can you show a measurable ROI in the first 30, 90, 180, and 365 days?
You have options, of course.
In any legal department — big or small — there are many opportunities to improve efficiency, optimize processes, and increase savings. There are so many opportunities, in fact, it’s easy to get distracted with projects that seem promising — but can take years before showing a return on investment.
The PERSUIT view: Matter inception is the fastest way to demonstrate ROI in legal operations
My team and I have worked with hundreds of in-house legal teams at some of the biggest companies in the world.
One mistake we see new legal operations teams make is working first on invoicing, e-billing, matter management, and other steps that happen later in the outside counsel management process.
Instead, we’ve consistently seen the best results demonstrating the value of legal operations by focusing first on the initial phase of the process: matter inception and sourcing.
Matter inception and sourcing
When I say “inception,” I mean first steps of a matter. It’s your initial response to a situation you need to manage. It happens when a former employee files a lawsuit, a VP emails you about a possible acquisition, or the moment you become aware of a competitor infringing on a trademark.
The first step of inception is straightforward: Can the matter be managed using in-house resources? If so, this is usually the most cost effective way to manage a matter.
If you can’t manage a matter in-house, that triggers the second step of inception: sourcing outside counsel. And it’s here — sourcing — that you can show the fastest ROI for your efforts — in the steps you take to change how your in-house attorneys select outside counsel for their matters.
The ROI of e-billing vs. matter inception
The ROI of a new e-billing system is often stated to be somewhere between 3% and 5%; in actual practice, it’s extremely difficult to measure. And full implementation of a new e-billing system often takes well over a year, making the ROI even more difficult to measure or demonstrate.
Contrast the uncertain 3% to 5% savings of a new e-billing system to what a legal operations team can achieve within months by focusing on the first part of a matter: inception and sourcing.
A real example from the PERSUIT platform
In this real example of a matter sourced on PERSUIT, an in-house team at a major Fortune 500 company showed significant costs reductions — while still engaging one of their preferred firms.
At the end of the process (which took less than a month), the team demonstrated an average 30% reduction in proposed cost from the firms they were considering — an average decrease of over $500,000.
And that’s just for a single matter.
A process flow
Here’s the key to showing ROI quickly in legal operations:
It is what you do during inception — the steps you take at the beginning of a matter — that dictates what you pay at the end. Conversely, moving too fast at the start often results in costly attempts (both in dollars and time) to correct course later.
Think of it like a process flow.
If you want to demonstrate the ROI of your efforts and validate the investment your company has made in you and your legal operations team, inception and sourcing are by far the greatest opportunities to demonstrate tangible ROI of your efforts.
Note: Want to learn more about how world-class legal teams run their outside counsel management programs? Check out PERSUIT's Guide to Establishing an Outside Counsel Management Program, which includes KPIs to report in the first 30, 90, 180, and 365 days of a new OCM program.