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Last Updated on March 27, 2023

Corporate legal departments (medium to large-sized ) can process lots of invoices from law firms annually. When companies manage this procedure without a uniquely designed invoicing system (or even worse – try to deal with it manually) there is a high likelihood that their staff will be overwhelmed and overpayments will be unavoidable. Needless to say, the staff is needed to process invoices and give the first line of the review. Quite frankly, the investment of staff time to thoroughly review invoices and identify errors is challenging even for a small legal department.

Without a reliable system that enforces billing standards, you will find staff attorneys spending huge amounts of time to finalize and approve invoices across their portfolios. Apart from the extra burden it puts on staff, most companies find themselves overpaying firms by 5% – 10% annually because of undetected errors.

In this article, you will learn more about some of the essential tools that companies can use to manage their legal spending.

Keep reading.

Simply put, spend management is generally a management discipline that deals with providing corporate legal departments control of their outside counsel spend – as well as other legal costs. As of now, many different spend management software products are available to promote this discipline. One of the most important aspects of a spend management software solution is a reliable e-billing portal that firms can use to transmit LEDES invoices. These e-billing portals need to be easily accessible, protected with encryption, and can also support any of the various approved LEDES formats.

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Another vital component of any reliable Enterprise Legal Management platform is legal Spend management. It is typically made with functionality in different fields of corporate legal management and operations.

There is a different way to look at this. As the overall management of “spend data” – via software tools built around enrichment technologies and core data classification. There are numerous methods of slicing and dicing your particular legal spend data, this is further complemented with spend analytics tools that are primarily used to alert, measure, and report on legal spend.

By minimizing the need for human supervision when it comes to the invoicing and approval procedure, legal spend management software significantly improves accuracy and efficiency. Combined with the latest analytic tactics, the platform provides legal teams with the chance to:

  • Enhance predictability when it comes to legal spend budgets because of the ability to compare the existing performance with expected outcomes
  • Evaluate outside defense firms’ performance depending on some vital metrics such as deposition costs by the firm, success rates, and percentage of indemnity claims alongside other legal markers
  • Allocating legal spend budgets through sound data-driven intelligence
  • Increase confidence that you will get the expected value with legal spend decisions
  • Improve the capability of aligning changes in your legal spend with corporate directives
  • Minimize loss payments and legal spend by strategically shifting lots of cases to high performing defense firms
  • Lower much of the labor-intensive effort required when manually approving invoices
  • Offer senior management and boards data-based support when it comes to legal spend decisions
  • Guarantee compliance with billing guidelines
  • More efficiently allocate in-house resources to demanding, high-value projects

Generally speaking, legal e-billing tools play an important role in the automation of an invoice, its approval, and the auditing process. By lowering the need for human review, these legal e-billing tools do away with much of the inefficiencies that tend to accompany a manual procedure and guarantee compliance with billing guidelines. Legal e-billing tools might have been developed some 20 years ago but are still an improvement over manual procedures – though they are basically an auditing function.

By incorporating an analytics component, you will take the simple auditing function to a whole new level. Depending on a common set of codes popularly referred to as Uniform Task-Based Management System (UTBMS), these legal e-billing tools can also offer a trove of billing data. This can be useful in informing decision-making if correctly analyzed. Certain legal spend management platforms try to analyze this invoice data by efficiently layering analytic methods over the legal e-billing codes. This approach’s output tends to have limited application.

More complex analytic approaches when it comes to legal spend management utilize artificial intelligence to analyze detailed text descriptions, as well as the unstructured data that support the codes. They can also provide highly granular information on important markers of legal spending in a company.

Here are some of the best practices of legal spend management that you can consider for your company:


One of the most important factors in legal spend management is usability. Typically, a vendor portal is established with e-billing software. This vendor portal usually acts as the intermediary between your organization and outside counsel.

The portal will show the invoices that are submitted by outside counsel to the legal team. Your legal team may then begin to review and approve the invoices, monitor the status of invoices, analyze spending reports, and obtain analytics from the invoices. Below are a few ways you can measure usability:

  • Submission of invoices: The submission of invoices needs to be fairly easy.
  • User-friendliness: Law firms usually manage many clients, and they need to use a wide range of software solutions because companies possess different e-billing systems. The legal software’s vendor portal needs to be user-friendly.
  • Interface: The vendor portal’s interface needs to be intuitive and easy to use. An easy-to-use interface will lead to law firms properly submitting invoices.

Based on a CLOC report, corporate spending on many law firms has significantly reduced recently with the assistance of e-invoices supported by LEDES invoices. LEDES is a universal invoice format that allows enterprise legal management software to have an easy time automatically assessing invoices and marking deviations from the agreed-upon terms.

Organizations usually hire a lot of law firms. Mostly, boutique firms don’t issue their invoices in LEDES. That makes it quite difficult for software to assess them automatically. You will need to explain the significance of a universal invoice system such as Legal Exchange Data Exchange Standard to your outside counsel and keep encouraging them to send their invoices in LEDES form. By doing this, it will guarantee that the processing of invoices is streamlined.

Consult with outside counsel

Research shows that e-invoicing can minimize errors by 37%. Legal spend management software’s efficacy improves significantly when outside counsel is involved. To achieve a seamless experience, the outside counsel will need to use your prospective legal management spending software as well.

How law firms implement the software is very important. Therefore, you need to consider consulting with your outside counsel and getting them on board with the specific legal software you want to use.


Organizations such as captives, insurers, and third-party administrators that deal with large legal spending have conventionally been required to cope with their outside defense counsel costs. However, today any company that has noticed its legal spending constantly rising and questions the rationale for such increases can gain from using a legal spend management platform.

Does your legal department outsource some tasks to outside counsel firms? If so, legal spend management is the perfect choice of managing costs, and controlling firm selection. Needless to say, gain foresight into future spending and budgeting to enhance the predictability of department results.


  1. https://mitratech.com/resource-hub/blog/what-is-legal-spend-management/
  2. https://provakil.com/blog/legal-spend-management-best-practices/
  3. https://www.milliman.com/en/insight/A-comprehensive-guide-to-legal-spend-management
  4. https://www.legal-suite.com/categories/blog-12830/articles/how-to-manage-legal-spend-450.htm
  5. https://www.simplelegal.com/blog/top-4-tools-for-in-house-legal