The connection between business intelligence and legal spend management

Most corporate lawyers and allied professionals I speak with agree data should drive decision-making. They see their peers in sales, marketing, finance and HR all using data to drive operational efficiency and cost savings – and they want that for the legal department as well.

To get started the legal department needs highly reliable historic and real-time data. However, even the early adopters often struggle to implement a reliable process to make this possible for their department on demand. 

Yet business leaders that do have this vision are capable of amazing accomplishments. Netflix is one of my favourite examples. They collect and analyse data about their customers' searches and viewing habits to predict what new content will sit well with their audience. They are wildly successful at it too – as evidenced by multiple hit shows the company has brought to market based on data.

When I bring this example up, I’m invariably met with a response to the effect, ‘we’re not Netflix.’ That’s true, but then, if the legal department had data, it could improve legal processes – such as bringing certainty and greater predictability to legal spend. 

The business intelligence cycle

Every organisation that collects data and tries to make sense of it to drive decisions follows a similar process. We call this process the business intelligence cycle. We define it simply as the process of collecting, analysing, visualising data – and delivering it to leaders to support their decision-making process. 

While there are many variations, ours is modeled on the British Army’s intelligence process. That’s thanks to our very own Colin MacLeod, who brought his experience as an officer to Apperio where he leads strategy and operations. He’s modified the process to fit legal spend management as a means of helping legal departments think through what is possible with data. 

Stage 1: Direction and planning

The process begins and ends with direction and planning. In the beginning, you may only have a hypothesis. You suspect there are ways to optimise legal spend and improve operational efficiency, but you need data to identify where, what and how. 

How Apperio fits: Apperio provides the expertise and facility to support the entire cycle. As we’ll show you in the subsequent steps, it’s a straightforward way to quickly run an analysis of legal spend data, optimise your costs and improve operational efficiency.

Stage 2: Data collection

Corporate legal departments traditionally have two ways of collecting legal spend data. The first way is asking for status updates from their law firms. However, this is often a delayed process.

As our CEO, Nicholas d’Adhemar wrote for Bob Ambrogi on LawSites:

“They [clients] call the partner, who calls the assistant, who calls the finance team, who pleads with the associates working on the matter to enter their time so they can run a report – and provide the partner with the data to respond to the client.” 

Since the data is pulled from multiple law firm systems, the format and data structures tend to be inconsistent. This requires heavy lifting to wrestle the data into a usable format. Even then, it still often contains gaps, and has the added risk of human errors being introduced.

The second way legal departments collect spend data is through e-billing. This is useful and often necessary, but e-billing also has shortfalls. For example, it draws attention to the tactical flags thrown by automated review instead of focusing on the strategic levers to drive efficiency. 

Additionally, e-billing data is only based on historical invoices processed through the system. While retrospective analysis is a productive exercise, the challenge is, you are reliant on invoices to inform you of a problem that occurred in the past.  Why would any other department be satisfied with such an archaic approach to managing their spend? 

How Apperio fits: Apperio completely automates the collection of legal spend data by receiving data directly from your law firm practice management systems. It converts the information into a usable format, categorises the information consistently, and allows you to see both real-time WIP/accruals and historical data.

Stage 3: Processing

How do corporate legal departments process data today? The vast majority use a spreadsheet. For example, among in-house lawyers in private equity, upwards of 70% are labouring over millions in legal spend data held in spreadsheets. However, that’s starting to change and for several good reasons.

Some of those reasons include the fact that spreadsheets require manual data input. This is error-prone and introduces version control problems. It’s also a laborious activity. Someone must be assigned the duty of collecting data, entering it into a spreadsheet, processing it and preparing it for analysis. 

It’s simply inefficient to have highly intelligent lawyers, or other allied professionals, spending copious amounts of time here. As a result, many legal departments either don’t perform the analysis at all, or only do it once or twice a year. 

How Apperio fits: Apperio automatically processes the data shared with it. The data is stored securely in the cloud, ready to be accessed by whoever you think needs it, when they need it (so long as they have an internet connection!). 

Stage 4: Analysis

As with collection and processing, someone must be tasked with the responsibility of analysing the data and producing charts and graphs – visualisations – for interpretation. Unless the legal department has someone dedicated to this task, the process tends to be ad-hoc or on an infrequent basis, often annually at best.

How Apperio fits: With Apperio, the analysis of legal spend is done for you. Based on years of research and cooperation with legal departments, we provide data visualisations and comparisons that legal operations and in-house lawyers find essential. It is in essence, a personalised legal spend intelligence platform that can be customised to your role. 

For legal departments that need greater nuance, our Customer Success Team, or consulting partners like Morae, can perform bespoke analysis.

Stage 5: Production

Production is the stage where you examine the analysis in the context of the business at large, including other data sources. This is the “so what” phase of the business intelligence process and where transformational change occurs. For example, weighing the business needs against the analysis. 

How Apperio fits: Apperio automates the first four steps, which allows you to focus your attention on adding value to the data: thinking about what this is telling you and deciding what to do about it. You might present the analysis to the CFO or other subject matter experts to produce courses of action and capitalise on what you’ve learned. Legal departments that have their own legal operations experts will review the analysis and prepare recommendations alongside their reports. 

Stage 6: Dissemination

The effort of collecting, processing, analysing and producing data is lost unless the findings are communicated. In business intelligence, this might be rendered in the form of daily or weekly reports that drive decision making. 

How Apperio fits: With Apperio, anyone that needs access to the analysis can get it. For example, think about the positive impact on the relationship between legal and finance – if finance had access to clear legal spend data with contextual analysis.

It’s important to note that the process builds on itself. The insights gleaned will feed a new or refined vision with specific goals during the next stage of direction and planning as the cycle repeats itself with continual improvement.

* * *

The business intelligence process outlined above helps to illustrate what’s possible with legal spend management. For many legal departments, the challenge often isn’t agreeing to the principle of leveraging data to drive decision making. Often, just getting started and knowing where to begin is the trickiest step. I hope this post, and Apperio, can help you to begin that journey with legal spend management.

See Apperio in action: The Apperio platform provides in-house legal teams with a proactive approach to legal spend management. We’ve already partnered with more than 200 global law firms to provide clients with insight into WIP.  See for yourself and schedule a live demo by emailing info@apperio.com.

If you enjoyed this post, you might also like:
3 examples of how corporate counsel is using legal spend management in practice