Designing an external spend management strategy at a large financial services company
Achieving cultural shifts and executing a comprehensive external spend strategy
The challenge
Following an ambitious refresh of their strategy, the legal function of a global bank wanted to place efficiency at the heart of their goals.
In translating this into action, they not only needed to target efficiencies in their own ways of working, but also in how they were interacting with the wider legal ecosystem, and in the way that they managed their budget.
Given the size of the organisation, there would be a need to drive significant culture and mindset change regarding how the legal function managed its external resources. To achieve this, a dedicated external resource management strategy was required, and our Legal Operations Consulting team (LOC) was engaged to help design and deliver this strategy.
The solution
In developing the strategy, LOC first worked with senior stakeholders at the client to:
1. Translate the overarching legal strategy into a set of external resource-specific strategic objectives.
2. Define five ‘pillars’ of the strategy – all within the control or influence of the legal function – which when delivered would help the client to achieve their objectives. These pillars were:
- the optimisation of their panel structure,
- the roll-out of a new, formalised relationship management model;
- the introduction of a matter allocation process to ensure the most efficient and suitable resources were engaged for each matter;
- the introduction of a clear pricing strategy and tendering process; and
- the implementation of legal project management.
3. Crucially, LOC worked with the client to develop a programme of work that would tangibly deliver on the strategy, setting out distinct, achievable projects under each pillar, which would contribute to the success of that pillar and therefore the strategy overall.
Despite having a clear delivery plan, LOC recognised that the real challenge was changing the culture around external cost management, and ensuring sustainable change that would last beyond the life of the programme.
Two workstreams were therefore set up to underpin all pillars of the programme:
1. Data
Improvement of the data available to the function, so that on a long-term basis, progress against relevant KPIs could be monitored and shared, helping to create a sense of accountability and ensuring the strategy remained a priority for the function as a whole.
2. Change Management
The delivery of a comprehensive change management framework, which included for example the creation of dedicated support teams, a user-friendly overhaul of guidance and policy documents using legal design techniques, external resource management training programmes, and the creation of both top-down and bottom-up sponsors.
This was all underpinned by a multi-channel communications approach, which was designed to not only share the strategy and how it would impact the legal function, but crucially, to provide a clear understanding of how actions taken by an individual would have a direct, positive impact on the achievement of the organisation’s overall strategic goals.
Finally, supported by the newly generated data and in line with the desire to deliver clear, effective communications, a highly ambitious ‘headline’ target was set to move 80% of all external legal spend to an Effective Fee Arrangement (EFA) basis. This helped to galvanise efforts towards delivering on the strategy, and provided a simple way to measure success.
Results and benefits
Following the release of the strategy and the supporting programme of work, the client was able to benefit from:
- An external spend strategy that was fully aligned with, and therefore supported by, the organisational strategy, giving ‘skin in the game’ to every member of the function in delivering on the programme.
- Supported by the above, a simple, clear communications approach that allowed for the core messages to be repeatedly reinforced, helping to drive cultural and mindset change before the delivery of the programme even started.
- An actionable programme of work, meaning the strategy did not exist just in theory, and instead came with a clear action plan for the function to achieve it.
- A clear KPI, still in use today, that is used as a simple barometer for the overall success of the strategy.
But there's more...
Following the roll-out and communication of the strategy, LOC worked with the client to deliver the programme of work to realise a much wider array of benefits. More to follow soon…
