Corporate legal departments (CLDs) in many industries are facing budget pressure as law firm rates rise. In the life sciences industry, the external forces are compounded by internal organizational drives to contain costs in order to maximize R&D investment. This “squeeze” makes it more important than ever for life sciences legal departments to maximize efficiency and eliminate spend leakage.
Fortunately, savvy CLDs have a secret weapon when it comes to better managing spend: artificial intelligence (AI). AI enables strategic spend management in several ways, yielding nearly immediate benefits. By leveraging AI, CLDs can ensure consistency among law firms, improve outside counsel billing guideline compliance by up to 20%, and enjoy cost savings of up to 10%.
With that in mind, let’s dive into three ways that AI can supercharge spend management and help CLDs in the life science industry deliver more value.
Drive value-added work
Billing guideline compliance is a key component of spend management. Billing errors cause significant spend leakage, but having a bill review team comb through invoices manually is inconsistent, expensive, and pulls employees away from higher-value tasks.
That’s where AI comes in. AI is well-suited for repetitive tasks like bill review, finding patterns within invoices and flagging likely violations for improved billing compliance and cost savings. While most life science CLDs have some form of an e-billing solution, many are not equipped to handle complex or non-standardized billing guidelines.
With AI-driven automated bill review, there’s also a lower chance of human error during the bill review process, which further prevents spend leakage. Additionally, attorneys are freed up to focus on value-added work—something that is particularly important when budgets are tight.
Gain complete visibility
Despite the popularity of e-billing platforms, CLDs are often forced to sort through paper invoices from some law firms. Yet again, this pulls attorneys away from higher-value work; no one goes to law school with the dream of doing repetitive administrative tasks. But the problem with paper invoices doesn’t end there. When invoices aren’t digitalized and in a standardized format, CLDs also miss out on both automated review and full visibility into their spend via analytics and reporting.
AI can help here, too. With AI-enabled invoice conversion, CLDs can quickly and easily convert paper or PDF invoices into standardized Legal Electronic Data Exchange Standard (LEDES) formatting.
By standardizing invoices, CLDs have complete transparency of their spend. They can see what’s working, what’s not, and what needs to change. These insights play an important role in minimizing leakage and better managing costs. Centralizing visibility and management of all vendor invoices has been shown to increase savings by up to 5%.
Look forward, not back
Finally, life science companies generally have a great deal of historical information about their firms and matters, but that data doesn’t always translate into actionable insights. While the majority of CLDs have collected data around outside counsel costs, additional steps are needed to use that data effectively. With AI, you can get value from your data to better manage spend now and into the future.
More specifically, AI-powered predictive analytics help legal departments gain confidence that they’re choosing the right firm at the right price for the right matter. They can also compare their internal data with industry benchmarks to develop more beneficial pricing and fee arrangements.
One thing is clear: using AI for spend management is a net positive for an organization’s bottom line. For more information about how your life sciences legal department can supercharge spend management and improve your overall legal ops performance, visit our life sciences industry hub.
