Unlock your legal team's secret weapon against budget cuts
Unlock your legal team's secret weapon against budget cuts
How to focus budget conversations on value instead of just cost.
Picture this: You're in a budget meeting with your CFO. They lean back, fix you with a stern gaze, and say, "We need to see a 20% efficiency boost from legal this quarter. AI is transforming every department - you're not exempt."
Sound familiar? If you're an in-house lawyer, I bet it does.
Here's the thing: that 20% target isn't wrong. But it's not the whole story either. It's like judging a book by its cover price - a discount might save you a few bucks, but it doesn’t mean the book is any good.
The Current Scorecard: All Quantity, No Quality
Most legal teams are stuck playing a numbers game. We count:
Contracts reviewed
Support tickets resolved
Dollars spent on outside counsel
Dollars spent on internal headcount
and sometimes: response time SLAs
It's not that these metrics are bad. They're just... incomplete.
A bit like rating a chef based on the number of plates they can prepare per evening. It’s relevant (if the chefs capacity is just 5 plates, your restaurant won’t survive), but it says nothing about how the food tastes.
Why This Approach Falls Flat
It's All About the Cost, Not the Value: Remember that time your legal team’s focus on negotiating robust liability caps saved the company from bankruptcy when a data breach occurred? Yeah, that doesn't show up in "support tickets closed per week".
Speed = Revenue: Faster legal ticket response times will lead to improving time-to-close (e.g. if a contract is stuck in your inbox for a week, versus same day turnaround, that will add a week). But a much bigger lever for improving time-to-close is which positions you take, not how fast you reply, as this may mean there’s just 2 rounds of negotiation instead of 5. The main point though is that in either case, most teams don’t explicitly put a dollar value on improving time-to-close. This means it’s harder to get budget for improving this metric than it should be.
Strategy: Legal advice that shapes business decisions and unlocks new markets? Invisible in traditional metrics, and as a result, legal teams don’t do enough of this.
Reframing the Conversation: Legal as a Value Creator
So how do we fix this? How do we show the true impact of legal work? Here's a start:
Calculate a ‘risk score’ for each negotiated contract: For each signed contract, record the handful of factors that you know tie to real risk (e.g. liability caps, exceptions to the caps, indemnities given and received). You can do this manually quite quickly, or use an AI tool. This will not only incentivise your team to only fight for what matters, but then to get credit for when they win on those points.
Link time-to-close to revenue: Show how faster contract turnaround + fewer of negotiation rounds impacts revenue.
This is easier for e.g. SaaS sales contracts than procurement contracts. For sales contracts, if you reduce time-to-close by two weeks you can show that this earned the company two weeks worth of average contract revenue. (Take annual contract value and just divide by 52 weeks to get your weekly revenue number).
For procurement contracts you need to take a rough figure that represents the opportunity costs to the business of not having access to the tools and services they need, but this will inherently feel a bit artificial so I probably wouldn’t start here.
Create a "Legal Impact Score": Try to combine risk prevention and deal acceleration into one metric. It doesn’t need to be perfect, just directionally correct.
Assess expected changes to Legal Impact Score when trying new things: Before buying new software, or making changes to the team composition etc, you can model the impact on the Legal Impact Score. You might find some 80/20 relationships.
Share all this with your CFO: Share the above thinking with your CFO to ensure that they’re not just looking at the budget number, but also the positive or negative trends of the Legal Impact Score.
The Bottom Line: From Cost Center to Value Creator
Here's the truth: Legal teams aren't just there to answer legal questions and ‘stamp’ contracts. You can be the invisible force multiplier that turns good businesses into great ones.
It's time our metrics reflected that reality. Because when they do, that budget conversation with the CFO stops being a defensive battle and starts being a strategic partnership.
And who knows? Maybe next time, instead of demanding 20% cost savings, they'll be asking how they can help you drive even more value for the business.
After all, that's the kind of efficiency that really counts.
Thanks for being here,
Daniel
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Daniel van Binsbergen
CEO at DraftPilot