By Timo Tschersig, Head of Customer Success at BusyLamp, a legal operations software provider.
CFOs are always under pressure to reduce costs, increase revenue and forecast accurately for the future. They can be forgiven for treating legal as a cost centre: a recent survey of chief legal officers by the Association of Corporate Counsel (ACC) found that one-third anticipate outsourcing more work to law firms next year. Outsourcing legal work is unavoidable and therefore one of the biggest potential expenses of any legal team.
There are three main ways legal can reduce costs when it comes to outsourcing: catching erroneous billing from law firms; improving efficiency and therefore reducing how much work is outsourced; and making data-driven decisions on which work to outsource to whom.
The same survey also found that CLOs are implementing new technologies to improve efficiency, and that more than half either plan to adopt a new technological solution or have done so recently. As outsourcing legal work is a necessity, a legal spend management technology solution that provides the ability to use granular spend data to drive more value from firms could be just one way in which legal and finance can reduce costs together. So what is it that holds finance and legal departments back from working together?
The case for a legal-specific solution
Many finance departments do not understand why legal can’t use the enterprise accounts payable (AP) system, but legal invoices are more detailed than other departments’ invoices and the way legal work is procured often differs too. In order to fully understand expenditure and therefore reduce costs in a strategic manner, corporate legal departments need to capture granular information – including detailed breakdowns of timelines, timekeepers and expenses coded against tasks, activities and expenses – than an AP system can manage.
A typical legal team will receive thousands of invoices a year. Because of their granularity, reviewing these invoices manually is time-consuming and prone to error. Different billing guidelines – what firms can and cannot invoice for – exist for different firms. Trying to remember and accurately apply these rules when manually reviewing invoices is a daunting task and mistakes, and therefore over-spend, will slip through the net. AP systems cannot manage these billing guidelines either and there are many other limitations. The answer, then, is to implement a technology that bridges the gap between legal and finance and enables each to work together.
The benefits of legal spend management technology
With the increased pressure on legal departments to improve efficiency and control costs, modern legal spend management solutions are a sensible option as they quickly generate savings that exceed the initial investment.
Legal spend management is the practice of controlling outside counsel spend such as the costs of using external law firms. Management of outside counsel spend involves having visibility of spend, identifying and actioning cost-reduction opportunities, and budgeting future spend. The level of detail provided by a legal spend management solution adds value to legal and finance, allowing legal departments to identify cost-saving measures both in the immediate term and by making use of data-driven strategies for the future. Most legal spend management systems integrate with the enterprise AP system, giving both finance and legal teams the information they need so they can work together smoothly and transparently.
This visibility of spend is especially useful in those situations where it’s not the legal team mandating the law firm. In some companies, business units can mandate firms directly, which is where a centralised legal spend management system can help provide company-wide reporting on total legal spend. This centralisation can also help the company negotiate volume discounts with the firm.
Using legal spend management to reduce costs
Legal spend management software can reduce costs for legal departments by automating invoice review and enforcing legal billing guidelines (rules such as caps on hours, total spend, expenses, overtime or staffing) through e-billing: the core feature of legal spend management solutions. By automating invoice review and guideline compliance with e-billing software, an in-house legal department can save 5% of external legal spend in year one, and 2.5% in subsequent years. It also offers real-time cost transparency, visibility and consistency of how legal bills, matter information and budgets are input, processed and centrally stored. This increased transparency makes budgeting easier and reduces unexpected costs.
As with many software tools, legal spend management dramatically improves efficiency and accuracy. With e-billing, information is automatically processed digitally and centrally with no need for manual sorting and organising. This saves a huge amount of administration time spent doing tasks which carry the risk of significant manual errors, and even makes some tasks, such as data entry, scanning and filing, redundant. With counsel no longer doing these admin tasks, they have more time to do legal work, which can reduce the volume of work being done by firms.
Having real-time, secure, accurate and consistent centralised data saves a lot of time accessing and reporting on documents, legal matters and financials. Custom reports required by the business can be scheduled for automatic creation and delivered to stakeholders in legal, finance, or elsewhere by email.
Over time, the use of legal spend management creates a database of all historic matters and their associated spend, broken down into UTBMS and LEDES codes – an industry standard for coding legal work to a fine level of detail. There will always be a need for expert legal advice from specialist firms and it’s worth paying for it on business critical matters. However, analytics can be used to gain insights into legal spend and inform data-driven decision making by using UTBMS-level codes to compare costs, savings, spending trends and budget-to-actuals across law firms, matter types, practice areas, task codes, jurisdictions, timekeeper seniority, and more. This allows the department to decide where savings can be made, but also where investment is necessary. The goal is to get more value and efficiency, rather than reducing costs for the sake of it.
Modern legal spend management solutions also include tools beyond e-billing and reporting that enable the entire lifecycle of legal work to be completed in a single system. One such feature enables counsel to submit request for proposals (RFPs) and cost estimates to law firms. Pre-structuring the requests in a consistent format ensures a fair and easily comparable response. Proposals are more likely to be competitively priced, as firms know they are competing for the work. Unlike enterprise procurement systems, these estimates also comply with the legal-standard coding that enables a more detailed evaluation of the proposal. Using data from responses and estimates can empower a legal department to make more informed resourcing and budgeting decisions faster. Throughout the course of the matter, law firms can submit Work in Progress (WIP), work completed that has not yet been billed. Unlike accruals, in a legal spend management system this is submitted with the same line item coding as the invoice itself. This gives both legal and finance visibility of upcoming invoices at a granular level and also allows invoices to be pre-approved. At the end of the legal matter, counsel can score the firm within the system and other lawyers can reference this qualitative data when mandating or negotiating with firms in the future.
Providing data to the finance department
Presenting legal spend data in a clear, concise way that gets the message across is a challenge, as different stakeholders will often want the same data presented in different formats. A legal spend management system automates invoice review so data is inputted consistently and has robust reporting tools for all stakeholder needs.
Legal spend management software empowers the legal department to make their own decisions around cost control, without blindly cutting budget in a way that may be detrimental to the business. At the same time, finance has access to the higher-level figures and KPIs that they need either through the legal spend management solution or a seamless integration between that and the AP system.
In order to deliver greater financial benefits to the business, finance and legal departments can put in place Key Performance Indicators (KPIs). These KPIs can be presented in a dashboard within the system, or sent by email to stakeholders on a regular basis.
KPIs worth considering include:
- Total cost of services (inside and outside)
- Legal spend as percentage of revenue
- Budget-to-actual total spend comparison (e.g., percent handled within budget)
- Outside expense versus in-house
- In-house lawyers versus revenue
- Cost per matter
- Cost per lawyer
- Spend after implementing e-billing compared to spend without.
Having one source of truth ensures all relevant data is held in one place. It means higher data quality, with more data available for better analysis and more reliable reports. There is greater transparency and all the information is readily available for the finance department.
Finance and legal: working together
With the increased pressure on legal departments to improve efficiency and control costs, legal spend management software quickly generates savings that pay for the investment so is a popular software purchase for legal operations managers. The benefits of legal spend management software are directly related to reducing costs so it’s easy to prove return on investment quickly.
The best way to improve legal operations to benefit the wider business is by eliminating cost surprises, wherever possible. Given the open-ended, unpredictable and sometimes urgent nature of many legal matters, it’s unrealistic to expect that everything can be accurately forecast. But steps can be taken to minimise the variables, improve the value, and help control overall spend, including some measures available through legal e-billing.
With a legal spend management software solution in place, legal departments and finance departments no longer need to be at loggerheads. In fact, the transparency between the two can only be of benefit to the business. Legal spend management improves reporting and forecasting, helps teams make smarter and more cost-effective outsourcing decisions, provides greater spend visibility as well as facilitating the negotiation of volume discounts, highlights and reduces errors such as overcharging by outside law firms and minimises risk such as exposure or gaps in legal counsel. By working more closely together, both departments not only support each other but also bring greater financial benefits to the business. In anyone’s book, but especially in that of the CFO looking to deliver cost savings across the business, that’s a win-win.
Take Five: Davos goes virtual
It is the end of January, so time for the Davos World Economic Forum (WEF), and Chinese President Xi Jinping, German Chancellor Angela Merkel, Japanese Prime Minister Yoshihide Suga and European Central Bank chief Christine Lagarde are among this year’s big-name speakers.
But Davos was not spared the pandemic hit; instead of gathering at the Swiss ski resort, the world’s great and good will do so virtually.
With the global economy deep in crisis, there is no shortage of topics: soaring unemployment and debt levels, growing income inequality and climate change.
And, like everyone else, the WEF is pinning hopes on normality returning – it plans a face-to-face meeting in Singapore in May.
Outpaced by a late-2020 surge in so-called value stocks, tech shares have roared back amid the pandemic’s unrelenting march. That is reflected in recent hefty gains for Russell’s 1000 “growth” index versus its value counterpart.
The gains could extend when Apple, Microsoft and Facebook report earnings. Also on deck is Tesla, which recently joined the S&P 500.
The results could push the combined market capitalisation of the FAANGs – Facebook, Amazon, AAPL Netflix and Google-parent Alphabet – back above their all-time peak of $6.16 trillion.
Netflix has done its part; robust subscription numbers reported on Jan. 19 have boosted its shares 17%. Now there are high expectations for the rest. Morgan Stanley has boosted the price target for Apple, declaring themselves “buyers ahead of what we expect to be a record December quarter print”. Microsoft reports on Jan. 26, followed by Apple, Facebook and Tesla a day later.
Graphic: The return of the FAANGs – https://fingfx.thomsonreuters.com/gfx/mkt/oakpeyelnpr/Pasted%20image%201611266376120.png
3/RED ENVELOPE FOR HONG KONG
Record amounts of Chinese money are flowing into Hong Kong stocks, pushing the Hang Seng index above the 30,000 mark, making it a global top performer and putting a floor under Chinese companies blacklisted by Washington.
The inflows have also pushed Hong Kong interbank rates to multi-year lows, meaning authorities may not even need to inject cash, as they usually do in the run-up to February’s Lunar New Year holiday.
An upcoming $5 billion IPO from Chinese online video company Kuaishou may draw in even more mainland money.
For a city rocked by pro-democracy unrest since 2019, this endorsement of its markets is a positive. Unless, that is, one views this as another sign of China’s growing political and financial stranglehold on the special administrative region.
Graphic: Mainland investors hunt for bargains in Hong Kong – https://fingfx.thomsonreuters.com/gfx/buzz/xlbvgylqevq/mainland%20investors%20hunt%20for%20bargains%20in%20Hong%20Kong.jpg
4/DRIVING OUT EUROPE INC BLUES
Europe’s STOXX 600 firms are expected to report a 26% earnings drop during the Q4 season which has just got under way. But that is history – let’s look instead at the January-March 2021 season when a 44% profit jump is predicted.
Such a surge seems intriguing given new continent-wide lockdowns. The explanation lies in consumer cyclicals, which Refinitiv I/B/E/S predicts will post an eye-popping 3,118% profit gain, versus the pandemic doldrums of Q1 2020.
Drilling down to single stocks, Daimler (1,471%), Fiat Chrysler, now Stellantis (177%) and Volkswagen (602%) turn out to be the largest contributors. Carmakers have seen their biggest earnings revisions in a decade and boosting shares to 14-month highs.
Graphic: Autos – https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqmnwxvx/Autos%20hold%20key.JPG
The coming week brings prelimary Q4 GDP data from France, Spain and Germany. Okay, the data is outdated and we already know the first quarter will show an activity dip from lockdown extensions. But let’s not be too hasty in dismissing the end-2020 numbers.
If the economies fared better than expected, it provides a cushion for the blow coming this quarter – that is the conclusion some reached after 2020 growth in powerhouse Germany turned out less bad than feared.
Also pay attention to Germany’s January inflation numbers, out Thursday. Those could show that a reversal in VAT cuts is easing the downward pressure on prices. In short, amid the pain inflicted by lockdowns, some positives might well lurk.
Graphic: Germany’s GDP data set for a bumpy ride – https://fingfx.thomsonreuters.com/gfx/mkt/xlbvgyjmmvq/theme2201DR.PNG
(Reporting by Ira Iosebashvili in New York; Vidya Ranganathan in Singapore; Karin Strohecker and Dhara Ranasinghe in London; Danilo Masoni in Milan; compiled by Sujata Rao)
Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards®
Global Banking & Finance Review has awarded Hisham Itani the Chairman and CEO of Resource Group, Technology CEO of the Year Middle East 2020 in recognition of his vision, strategy and strong leadership that have contributed greatly to Resource Group’s success in winning the Most Innovative Holding Group Middle East 2020 in this Global Banking & Finance Awards®.
Resource Group is an investment group with a portfolio of diversified businesses that capitalizes on technology and human talent for value creation. The company has proven that it has gone the extra mile to develop innovative solutions aimed at improving people’s lives and helping Lebanon transition toward a knowledge-based economy. Global Banking and Financial Review, the renowned online and print magazine identified a number of areas that Resource Group has excelled. The company has been awarded Most Innovative Holding Group Middle East 2020, and Hisham Itani the Chairman and CEO, receives the award for Technology CEO of the Year Middle East 2020. Under his leadership, Resource Group has grown from a family security-printing business to a diversified international investment group, with a portfolio of companies across 10 sectors in over 75 countries.
Wanda Rich, editor Global Banking & Finance, said “Mr. Itani took the security printing business to another level and expanded into different technology verticals in an impressive list of success stories”. The list includes digital security, smartcard manufacturing, mobile value added solutions, cyber security and secure communication solutions, telecom infrastructure and managed services, elections supply chain services, lottery systems and operations, mobile and virtual reality games, among others.
Resource Group’s focus on technology has had a constructive and tangible impact on government automation and on citizen experience in target markets.
Editor Wanda Rich says “We are proud to offer Resource Group these prestigious awards and wish them continued success and growth into 2021 during these challenging economic times”.
Global Banking and Finance Review is a renowned online and print magazine. The magazine’s website alone receives over 7 million page views annually. Global Banking and Finance Review provides a balanced view with formative and independent news from the financial community. The Global Banking & Finance Awards® were created to recognize companies of all sizes that are prominent in particular areas of expertise and excellence within the global financial community. The awards are known throughout the global banking and financial community. They reflect the innovation, achievement, strategy, progressive and inspirational changes taking place within the financial sector.
Bouncing back in 2021: Digital Transformation is no longer a choice as dependence on 5G, IoT and Data increases in society and business
By Ivan Ericsson, Head of Quality Management, Expleo Group Limited
The global pandemic has put enormous strain on businesses and brought into sharp focus the importance of being agile, adaptable and able to increase the pace of innovation and change at short notice – catapulting technology right to the top of the agenda for many organisations.
As the economy works to get back on its feet, technology is only going to play a bigger role in our lives. At Expleo, as experts in digital transformation and the reliable implementation of technological innovations, we’ve outlined the biggest tech-driven trends that we expect to see in 2021 and beyond.
1) “Digital transformation” no longer a choice
If the COVID-19 pandemic has taught businesses anything, it’s that they need to be poised to respond to abrupt market disruption at any moment, making digital transformation mandatory overnight.
With no room for delay, hugely complex corporations – that have historically been slow to adopt technology – have had to accelerate their reliance on technology just to keep afloat in recent months. Digital change, at speed, has become the norm.
Even last year, the idea of an unscheduled video conference call might put people on edge – now most of us wouldn’t think twice about calling a colleague over Teams or Zoom even for a 2-minute conversation. At the same time, social infrastructure has moved with the needs of its users, with telecoms giants strengthening and opening up networks so we can keep communicating despite social distancing.
There are now very few excuses left for operating in a non-digital way. All businesses need to be intelligent businesses that can change direction nimbly, with speed, confidence and composure. As we see more businesses putting this into practice, it’ll likely result in an increased number embracing and normalising some of the behaviours of tech-savvy giants like Apple and Amazon, who have no doubt thrived during this period.
Their success can largely be attributed to normalising an agile approach. By ensuring all applications have testing facilities built in – a “quality shadow” if you will – it allows for continuous improvements, and the ability to change direction quickly and confidently, when needed. This is particularly valuable today as the world becomes more fast-paced and increasingly unpredictable.
2) Big data/AI/predictive analytics
We’re moving into a space where big data can be extracted from the most seemingly innocuous places. In a hyper-connected world, a move as simple as a dog walk could offer huge swathes of data to the right companies. Many businesses already realise the benefits of capturing and utilising big data, but not all have taken advantage of it. The businesses that move quickest are most likely to reap the rewards in a more impactful way than their ‘data shy’ competitors. Where data used to be a side effect of business operation, it is now the driving force.
As businesses begin to rely more heavily on data to make critical decisions, independent assurance becomes increasingly important to get those decisions right. Forward-thinking, data-driven organisations must therefore assure that the data is correct in the first place, to avoid giving businesses false confidence and risk them moving in the wrong direction – something that is rarely affordable in today’s competitive and fast-paced environment. If businesses are not 100% confident in assuring the quality and accuracy of their own data, they should look to a third party for support.
A key data trend we expect to see moving further into 2021 is the increased use of predictive analytics. At the moment, businesses will often use data analytics to give us insights into our past activities, or to tell us where we are right now. However, the real value lies in knowing where we are going and how we are going to get there. Data analytics will help to identify the optional levels that can be pulled to drive change and realise business benefit.
Secondly, as intuitive technology advances and becomes more accessible, we expect over the next 12 months to see companies of all sizes begin to adopt artificial intelligence (AI) to drive intelligent analytics. In this context, AI refers to various technologies that allow machines to learn, sifting through ‘messy’ big data in order to find and unlock valuable predictive insights into future events. This allows businesses to better adapt their strategy to likely future outcomes and get a head start in the market.
However, with this ever-increasing emphasis on data and data protection, ethical AI will have a more prominent role to play in 2021 and beyond. Protected, usable Data is a by-product of good data security and privacy measures; however, the public remain wary of how their data is being used, particularly after the fallout from Cambridge Analytica’s use of data to influence an election. Businesses, therefore, must give their customers confidence that their data is secure and protected.
3) Moral relevance/corporate altruism
Research shows that young people are increasingly researching and considering the ethics of brands they’re purchasing from. And it won’t be long before this attitude starts seeping into every other aspect of their lives, with more and more people wanting to work for what they consider to be “purpose-driven” businesses.
Talent is the lifeblood of any company, so for big corporations, many of whom were born to create profit, this could put them in a tricky position. They might already be influencing society in a positive way – but this is unlikely to have ever been their main goal.
Moving forward, however, all organisations will have to start thinking about the “Triple Bottom Line”. That means considering the environmental and social impact of your business, alongside your commercial imperative.
We’ll soon see a mindset switch across businesses, from ‘competing’ to ‘advancing’. Instead of wanting to be the “best,” the question will be, how can I better serve the world around me?
In line with this, businesses will have to start thinking more about how to use tech for good, as we’ve seen with the likes of Microsoft Teams connecting tens of millions of people every day, during this very dark time.
2021 is likely to bring even more inroads when it comes to using technology to improve society, whether it’s developing bespoke problem-solving technologies or using IT to ‘eco-proof’ existing sectors, the goal for businesses is to rise to this challenge and build a better future for people and the planet through the use of technology. But all organisations will continue to need to be able to justify technology use and prove that they’re using it ethically, and in a secure manner.
4) 5G new networks – just about all big trends are driven by/reliant upon faster networks – particularly relevant for a more distributed workforce
Greater access and utilisation of 5G networks across the country will underpin and accelerate all of the key trends discussed. Everything we do on our smart devices we can expect to do at higher speed, greater capacity and with lower lag times.
As our digital footprints extend beyond simple web browsing and into our daily lives through smart technology, we are creating huge amounts of data every minute. This vast flow of data is increasingly dependent on new high bandwidth networks to facilitate it. Therefore, the merging of technology and engineering will become critical in ensuring big data is carried successfully to drive analytics and drive business.
The fact we have managed to successfully work from home during COVID is a glowing recommendation for the quality of the networks as they exist today, and they will only get better.
The telecoms industry is already working overtime to ensure that people all over the country get reliable access to the internet – and the fact that there is still inequality in this area proves just how challenging this is. But, in line with this trend toward hyper automation, which will make data extraction and analysis a part of everyday life for businesses, the consolidation of tech and engineering will be ever more important.
Forward-thinking companies will look to incorporate 5G networks into their business strategy. This could be from an internal perspective to enhance the abilities of their remote workforce. Alternatively, this could relate to their own products or offerings – developing an internet of things (IoT) strategy, improve user experience, or bring products to market faster by analysing big data and adapting quicker. Either way, with increasingly improved networks, businesses are expected to take advantage of the huge increase in accessible and usable data.
For businesses to truly reap the benefits of these new technologies, they must be developed and adopted in the right way.
Quality assurance, trust and security are three key requirements that the technology of the future depends on to succeed. Having these requirements at the heart of any digital transformation will ensure that systems perform reliably, having been tested and assured.
By prioritising a seamless customer experience combined with an ability to create, test, and scale digital solutions and operationalise at pace, businesses will be in the best possible position to take advantage of the potential being unlocked by these new technologies.
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