With demand falling across the board and the world dancing on the precipice of recession, legal departments are facing tremendous pressure to cut costs. In conversations with general counsel the ALM Pacesetter Research team has held in recent months, many described receiving marching orders to reduce outside counsel spend by some arbitrary, often double-digit number.

Of course, legal departments tended to split their view of spend management between their internal department cost management, and their external spend – or their matter management. For their internal spend, the answer was resource management. Their approach to matter management was a bit more complicated, however.

Among the responses we encountered in our conversations, we found a maturity curve on which we could plot legal departments. On the more reactive end, legal departments simply demanded rate freezes or cuts from their outside counsel, and also did things like delay payments to law firms for short-term accounting gains. To our pleasant surprise, however, we found a large number of legal departments who understood that the solution to their dilemma lies not in shell game-style budget tricks but in working more collaboratively with outside counsel.