All you need is your people: running a legal department on a low budget

Most companies are redesigning their teams and operations in response to the economic slowdown. In-house legal departments are being asked to address the challenge.

When your budget is constrained, it’s time to take a deeper look into your priorities, identify cases for real savings (not false economies), team up with other departments, and look more strategically at your internal resources.

So, how can you achieve more with less?

1. Make strategic choices

When your budget is constrained, it’s time to strip away anything that is not essential.

With that said, the essential resources that an in-house legal department needs to sustain effective performance vary significantly from team to team.

These resources depend on factors such as:

• the size of the in-house legal team – what is your capacity to absorb more workload?
• the experience of their members – how much specialist external advice do you need?
• the structure of the wider organisation – can the responsibility for any matter be shifted to another department?

Identifying non-essential items requires you to think in terms of strategic priorities and then challenge those priorities one by one.

Say, for example, that one of your in-house legal team’s priorities for 2023 is to retain talent who have been doing more of the same for too long and, as a result, start to demonstrate disengagement.

Solutions may be identified by looking at what internal resources are already available.

Some options may include creating job rotations to broaden experience or adding your team to an existing internal mentoring programme.

If your priority is building more capacity, but recruiting is not an option, a possible in-house solution could be to free up some of the time spent by the legal team in meetings.

You could aim to redirect 15% to 20% of non-efficient meeting time into legal work.

Ask yourself: are there any internal meetings that could be merged or eliminated altogether?

2. Can you make a case for real long-term savings?

One of the most recurrent problems with cost-cutting is creating false economies and short-lived efficiencies.

False economies develop when decisions made in the name of efficiency end up costing more than they save.

However, it’s not only the figures that prove to be off in the long run – incorrect re-sizing exercises are also demoralising.

People know when an adjustment is not sustainable or forward-looking.

Most organisations have made, at some point, cost-cutting decisions that, with hindsight, proved short-sighted. Use that knowledge to make smarter decisions.

A recurrent example of a false economy for an in-house legal department is cutting valuable resources.

It’s rarely a good idea to expect that the same workload can be managed by, say, 20% fewer lawyers. This is especially true when the team is already lean.

Downsizing is unlikely to truly save further costs, but is likely to increase your external legal spend and require you to re-invest in recruiting (and re-training) new team members one or two years later.

To build a convincing case for real long-term savings (which sometimes include an initial investment, such as in new technology), you need reliable data and evidence.

And gathering reliable data normally requires a collective effort.

3. Turn to your team

Although remuneration and material offerings are a meaningful component of each job, surveys in the workplace reveal time and again that what keeps people going during hard times has more to do with meaning and purpose than material incentives.

Some of the real differentiators of a great legal department require little or no budget. Here are a few examples:

• promoting better collaboration
• creating meaning and purpose
• building trust

While boosting engagement with the support of external resources can be a great way to go when your budget allows, you could also cut a number of costs (especially those that are not being efficiently managed) without cutting your team’s sense of purpose.

Turn to your team and ask for suggestions on how costs can be saved.

Team members, when involved in the decision-making process, are usually more motivated to help, which will lead to more achievable savings.

Your team members may also point to better and more sustainable cost-savings: people who do the job day in and day out usually know where to cut.

4. Team up with other departments

The raison d'etre of any in-house legal department is adding value to the organisation.

To add value, in-house legal teams must have a clear understanding of their organisation's goals, challenges, and needs.

One of the greatest ways to achieve this without tapping into a budget is by creating more opportunities for cross-organisational learning initiatives, such as internal workshops and networking events.

Internal know-how (such as who does what within the wider organisation) is one of the most valuable forms of know-how for any in-house legal team.

And although a budget for team-building events always helps, remind yourself that internal know-how is something money can’t buy.

Also, consider teaming up with other departments to consolidate similar activities and save costs.

Can you share, for example, any internal resources with the finance department? Can you combine purchases of external services (including legal services) with your HR department in order to obtain better rates?

When collaboration is in place, you will be surprised to see how many opportunities for win-win solutions can be created.

5. Cost-cutting, and achieving more with less, is part of the cycles of every in-house department

Building resilience as a team includes acknowledging that resizing, restructuring, and redesigning responsibilities are part of each company’s cycles, and often come in tandem with economic cycles.

Learn your lessons and learn them together.

An engaged legal team, who is capable of resiliently navigating these cycles and emerging stronger, will perform better than a team that is backed by a good budget but has no engagement.

As one intervention is unlikely to solve everything, try to accept that you will learn as you go, too.

You will likely need a number of incremental interventions and progressive adjustments before realising that you have achieved more with less.

All ideas, especially great ideas, get better with practice.