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Corporate legal departments are experiencing a shift in perception, as they are no longer considered untouchable costs. Legal departments invest strategically to boost efficiency with limited resources. EmpoweringCPO’s team uniquely combines services, technology, and consulting to help clients identify and implement immediate cost savings opportunities. Through a wide range of offerings, we empower our clients to navigate legal finances efficiently and achieve tangible savings.
One of the foremost Fast-Moving Consumer Goods (FMCG) companies, our client holds a paramount position in the United States. A formidable company with turnover of more than $6 billion, they boast a legal spend surpassing $320 million.
The client, faced challenges in their legal spend management. Struggling with a lack of transparency, existing systems failed to provide a clear breakdown of legal budgets across diverse matters and service providers. Manual processes and disparate systems exacerbated the situation, leading to inefficiencies in tracking legal expenses and potential oversights. Furthermore, the absence of an analytical foundation hindered strategic insights, limiting the client’s ability to optimize vendor relationships and resource allocation within the legal procurement landscape. These challenges underscored the crucial need for a comprehensive solution to enhance transparency and streamline legal spend management for improved decision-making.
EmpoweringCPO implemented a comprehensive legal spend analysis solution to address the challenges faced by the client. The process involved the following key steps:
1. Data Aggregation and Integration: EmpoweringCPO integrated with the client’s existing systems to aggregate data from various sources, including invoices, contracts, and billing records.
2. Categorization and Classification: The system employed advanced algorithms to categorize and classify legal expenses based on different criteria such as matter type, legal service provider, and geographical location.
3. Real-time Reporting: EmpoweringCPO provided the client with a user-friendly dashboard for real-time reporting and analytics, offering a clear and detailed view of legal spending patterns.
Through EmpoweringCPO’s multifaceted approach, our team delivered remarkable cost savings and operational efficiencies. Here’s a closer look at the impactful deliverables:
1. Conversion to Flat fees: Through comprehensive supplier comparisons, we identified key suppliers responsible for a significant portion of services and expenditure. Utilizing this data, we recommended transitioning these suppliers to flat fees for bundled services instead of hourly rates for individual services. This strategic implementation yielded a substantial 27% cost reduction, enabling a more efficient and cost-effective approach to legal spend management.
2. Strategic rate negotiation: We performed a year-over-year analysis of hourly rate variations for each resource, pinpointing significant fluctuations and resources with notable increases in hourly rates. By investigating the rationale behind these sudden rate hikes, we empowered the client to negotiate more effectively, ensuring informed and strategic rate negotiations.
3. Cost prioritization: We pinpointed primary vendors accounting for 80% of a ~$320M legal spend, highlighting them for potential cost-saving endeavors. This focused strategy, targeting major spend contributors, aimed to maximize savings effectively.
4. Thorough billing rate analysis: We undertook an exhaustive evaluation of billing rates across various vendors, ensuring competitive pricing for similar services, offerings, and resource levels. Through this analysis, we identified vendors offering the most competitive rates. Our meticulous examination aimed to ensure that the client received the best value for their legal services, aligning pricing with industry standards.
5. Driving Negotiation Through Benchmarking: Utilized strategic analysis leveraging benchmarking and trend data from secondary sources. This data-driven approach informed successful renegotiations, ultimately optimizing costs for the client.
6. Resource utilization assessment: Evaluated vendor hours for identical services to streamline resource allocation and bolster overall efficiency. This strategic approach aimed to maximize resource utilization, thereby enhancing operational efficiency.
The implementation of EmpoweringCPO’s legal spend analysis solution yielded significant positive outcomes:
1. Increased Transparency: The client gained unprecedented transparency into its legal spending, allowing granular cost breakdowns and heightened clarity on budget allocation, facilitating a more comprehensive understanding of financial dynamics.
2. Cost Optimization: By identifying areas of overspending and renegotiating contracts with legal service providers, the client achieved substantial cost savings of 10% without compromising on the quality of legal services.
3. Informed Decision-Making: Leveraging data-driven insights, the legal and procurement teams made informed decisions on vendor selection, resource allocation, and overarching legal strategy.
4. Improved Compliance: The implemented solution played a crucial role in enhancing the client’s compliance with legal budgets and regulatory requirements. This proactive approach significantly reduced the risk of unexpected legal expenses.
EmpoweringCPO’s legal spend analysis solution proved instrumental in transforming the client’s approach to legal procurement. The implementation not only addressed existing challenges but also empowered the client with the tools needed for proactive cost management, strategic decision-making, and enhanced collaboration between legal and procurement teams. By leveraging data-driven insights, the client positioned itself for greater efficiency, transparency, and cost-effectiveness in its legal operations.
EmpoweringCPO is a team of experienced sourcing and procurement professionals with hands on experience of having worked with many fortune 500 companies. The company was founded in 2011 and since then has executed multiple strategic sourcing projects and have achieved average savings of 10-12% so far. In addition to Strategic Sourcing their other offerings are Spend Analysis, Procurement Intelligence, Procurement Analytics, Best Cost Country Sourcing, Procurement Outsourcing, Built Operate Transfer, Supplier Diversity, Sustainable Procurement, Tail Spend Management, Item Master Optimization, Collective Buying, Compliance Tracking and Managed Procurement Services.
Compliance management is very critical as otherwise the procurement organization may run into a scenario where there is a huge gap between realized savings and reported savings. Many procurement functions estimate large savings numbers when contracts are signed. They also invest significant time and effort in negotiating contracts for necessary goods and services, only to have a third or more of their purchasing dollars flow outside those deals. Some of the obvious fall-outs of non-compliance and maverick purchases are:
As compared to the current contract that was finalized after the sourcing process, the tool helps in tracking:
The objective of this tool is to ensure that the orders are placed only with the vendors that were shortlisted after the sourcing process and at the same price that was agreed upon and negotiated during and after the strategic sourcing process.