A staggering 9 out of 10 departments don’t know what they spent last year.
Spend visibility is a priority
93% of U.S. corporate legal departments see controlling outside legal spend as critical,
But only 13% considered their spend management as ‘optimised’. This hinders resource decision-making in a changing market.
The move to in-house talent is expected to grow from just above 20% (2017) to 35% (2025)2.
Challenge 1: Invoice delays
Late invoicing by external counsel means legal spend tracking is often four months or more out of date.
The gap between work done and invoicing is:
- Immigration work: typically 36 days
- Average across all disciplines: 93 days
- Real estate: 239 days – almost eight months!
Challenge 2: Unwarranted charges
Weak practices and ageing billing systems lead to inadvertent but costly errors.
- We found that 2.38% of fees were billed for tasks that would normally be excluded from law firm/client agreements (travel, scanning/printing, internal meetings etc.)
- That’s over £2m from our dataset - and across the UK legal services industry, that 2.38% would amount to £835M of unexpected costs for in-house legal departments per year!
Challenge 3: Errors
Complex systems lead to inadvertent charging errors, for example, we found:
- £20,000 in Duplication of time entries
- £36,000 in Misallocation – an incorrectly allocated photocopying charge
- £42,000 in Inaccurate charge out rates
Challenge 4: Inconsistent and late time recording
Ageing billing systems also encourage inconsistent and late recording of 6- and 12- minute billing units. And late recording encourages inaccuracy.
We found that:
- Three days after work done, billing units are more than six times less likely to be recorded.
- Four days after work done, billing units are over four times more likely to be rounded to the nearest half hour.
Alternative arrangements are not a quick fix
We found that 21% of fixed fee arrangements are billed over agreed budgets anyway.
And capped fees don’t necessarily yield value – they ultimately incentivise firms to allocate their lowest-cost talent.
The Three Financial Failings of the Legal Profession
In this free insight report, Apperio’s analysis of several hundred million pounds of 2018 UK legal spend reveals how in-house legal teams are forced into an impossible situation caused by a lack of visibility and transparency, confusing alternative fee arrangements and recurring inadvertent errors.
More importantly, the report outlines how advances in technology driven by a new generation of Legal Tech start-ups are reversing the situation. By giving in-house legal teams real-time visibility and transparency of their spend, they’re helping to bring clarity, control and confidence to legal budgeting, enabling in-house legal teams to reclaim their rightful position as a strategic organisational function.
Access the full report here.
 2018 Thomson Reuters Legal Tracker Legal Department Operations Index
 Apperio Insight Report: The Three Financial Failings of the Legal Profession