Overcoming the legal spend 'black box' issue

Legal spend can often feel like navigating in the dark. Costs emerge unexpectedly, budgets are blown, and by the time the full picture becomes clear, it’s too late to make the needed adjustments.

This lack of visibility is what’s known as the “legal spend black box.” It’s a problem many organisations face: you know work is happening, but the specifics—how much time is being spent, what the costs will be, and whether you’re on track to stay within budget—remain unclear until the invoice lands. And by then, the only option is damage control.

In fact, our research study found that 79% of Private Equity legal leaders experience surprise legal bills, with little warning.

But it doesn’t have to be this way. In this post, we’ll talk through how to tackle the black box challenge head-on with practical strategies to manage legal spend with transparency and confidence—leaving guesswork firmly in the past.

Why is legal spend so hard to track?

When organizations struggle to track legal spend, it usually comes down to one core issue: visibility.  When processes and tools aren’t designed to provide real-time insights, organizations are left playing catch-up—reacting to costs rather than managing them proactively.

Here are the most common reasons why this happens:

Fragmented communication 🧩

Legal teams, finance departments, and external law firms all need to work together smoothly. But too often, they operate in silos. Important updates get stuck in email chains, budget discussions happen too late, and no one has the full picture until the invoices land.

Outdated tools ⚙

Many organizations still rely on basic spreadsheets or manual reporting to track legal costs. These tools only show you what's already been spent – making it impossible to adjust course mid-matter. You're always looking backwards instead of planning ahead.

Missing continuous WIP data 📈

Without visibility into work in progress (WIP) and accruals, teams can't spot potential overruns early. By the time invoices arrive weeks or months later, it's too late to make meaningful adjustments.

Here’s how this impacts organizations…

The hidden costs of poor legal spend visibility

Poor visibility into legal spend creates problems that go far beyond budget overruns. Let's look at three major impacts this lack of transparency has on organizations:

1. Unpredictable budgets and missed savings

When you can't see costs as they accrue, overspend isn't just possible – it's likely. But the impact goes deeper than immediate budget concerns. Without accurate forecasting, you miss opportunities to optimize spending and allocate resources more effectively.

2. Strained relationships

Surprise legal bills create unnecessary tension between teams. Finance feels blindsided by costs they couldn't anticipate. Legal struggles to justify expenses they couldn't track. External law firms get caught in the middle. Over time, these situations erode trust and make decision-making more difficult – exactly when teams need to work together most effectively.

3. Productivity drain

Think about all the time your teams spend chasing information about legal costs. Reconciling invoices. Resolving disputes. Following up on budget status. Instead of focusing on strategic priorities, teams are stuck firefighting, reacting to issues that could have been prevented with better visibility.

These issues compound each other. Budget unpredictability leads to strained relationships, which in turn create more operational inefficiencies. Meanwhile, valuable initiatives get delayed or shelved because no one can confidently predict or manage legal costs.

And this isn't just affecting a few organizations. Our research found that 54% of finance teams have resigned themselves to the notion that legal expenses will always be unpredictable. 

But here's the good news: solving this transparency challenge is possible – and it starts with understanding exactly what these blind spots are costing your organization.

4 steps to better legal spend management

The path from unpredictable to transparent legal spend isn't complicated, but it does require the right tools and approach. Here are four practical steps you can take:

Step 1. Implement purpose-built technology

Modern legal spend management software gives you something spreadsheets can't – continuous monitoring of legal costs. Here's what to look for:

• Real-time tracking of WIP and accruals
• Automated invoice processing and approvals
• Customizable reporting that focuses on your key metrics

The right technology transforms legal spend from a black box into a transparent, manageable process.

Step 2. Let data drive your planning

Historical spending patterns hold valuable insights for future planning:

• Analyze past matters to understand typical costs and variations
• Identify trends that drive budget overruns
• Build smart contingencies into your budgets based on actual data

When you replace assumptions with data, your forecasts become significantly more reliable.

Step 3. Focus on the right metrics

Choose KPIs that give you meaningful insights into your spend management:

• Average cost per matter: Track costs for similar cases to highlight inefficiencies.
• Budget adherence rate: Measure how often matters stay within the agreed budget.
• Time to invoice approval: Monitor how quickly invoices are reviewed and processed to streamline workflows.

These metrics help you spot issues early and measure the impact of your improvements.

Step 4. Make continuous monitoring your standard

The true power of modern spend management comes from staying ahead of issues:

• Track in-progress work and accruals as they happen
• Set up alerts for unusual patterns or approaching limits
• Review data regularly to catch trends early

Each of these steps builds on the others. Technology enables data collection, data informs your metrics, and those metrics guide your real-time monitoring. Together, they create a system that puts you in control of your legal spend.

If you like these steps, we think you’ll love our ebook. It’s packed with best practices to improve legal spend management 👇

📕Further reading: Maturity curve: Legal spend management

Still on the fence? If you aren’t sure if moving to modern legal spend management software is the right approach, here’s a reminder of your current issues.

Why traditional methods no longer cut it

Traditional approaches to legal spend, such as standalone traditional e-billing, give you visibility, but only after the fact – when you've already spent the money. This creates three significant problems:

• Lack of proactive insights: Without real-time data on WIP and accruals, you're always a step behind. By the time you spot an issue in an invoice, the opportunity to manage that spend has already passed.
• Increased risk of overspend: Costs can escalate rapidly when your first chance to review them comes after the work is done.
• Inefficiencies in spend control: Teams waste valuable time chasing invoice details, reconciling costs, and resolving disputes. These administrative tasks could be avoided with better upfront visibility.
• Lack of historical data: As you only get data when an invoice is submitted. You do not have any data to create trends or benchmarking.
   

Ultimately, the reactive nature of traditional methods limits their ability to address the root causes of spend inefficiencies. This is very different to when you use modern legal spend management solutions…

The better way to manage legal spend

Think about how effortless it feels when systems just work – when data flows smoothly, teams collaborate naturally, and you can focus on strategy instead of firefighting. That's what modern legal spend management makes possible. Here's what changes when you bring real visibility to legal costs:

✅You finally get true budget control

Real-time insight into WIP and accruals puts you in the driver's seat. You'll be able to:

• Catch potential overruns while there's still time to act
• Put resources where they'll have the most impact
• Build forecasts you can actually trust, backed by continuous data

✅Teams work better together

When everyone sees the same information at the same time, collaboration just clicks:

• Automated processes handle the tedious tracking and reporting
• Legal and finance teams stay aligned on goals and progress
• Fewer disputes arise because everyone works from the same numbers

✅Law firm partnerships improve

• Better visibility doesn't just help internally – it changes how you work with external counsel:
• Build stronger relationships through transparent communication
• Create natural accountability without the awkward conversations
• Have more productive fee discussions based on shared data

The best part? All of this adds up to more than just better cost control. It means your teams can stop chasing numbers and start focusing on work that actually drives value. Legal costs become a manageable part of your business strategy, not a monthly source of stress.

Time to take control of your legal spend

The truth is, managing legal spend doesn't have to be complicated. Just like modern technology has transformed how we handle everything from banking to project management, it's now making legal spend transparent and predictable.

Think about it: Every team in your organization already has the tools they need to work effectively - except when it comes to managing legal costs. That's about to change.

With the right approach and technology, you can transform legal spend from your organization's biggest question mark into one of its most predictable metrics. Your teams will work better together, your law firm relationships will strengthen, and you'll finally have the clarity you need to make strategic decisions about legal resources.

The tools are here. The strategies are proven. The question is: Are you ready to gain total visibility of legal spend? We’d love to show you how we can help. Book a demo here today.