In the past couple of months, the impact of litigation costs on corporate profitability has taken center stage in quarterly financial report results. For example:
- Citigroup reported Q4 litigation costs of $2.7b, virtually wiping out its profitability for the quarter;
- Deutsche Bank reported Q3 litigation and investigation expenses of £3.1b, resulting in a quarterly net loss of (£94m); and
- Bank of America reported an additional $400m litigation charge in Q3, resulting in a net loss of ($232m) for the quarter.
The material impact that litigation costs have on the total valuation of the corporate enterprise has never been greater, and neither has the importance of developing a strategy within the legal department to minimize litigation costs. We recently conducted a study with a dozen Mitratech clients to identify the savings that result from implementing an integrated ELM solution (matter management and e-Billing) within the legal department, and the results illustrate the true value of legal technology.
On average, Mitratech clients saved 6% annually in total legal spend through improved enforcement of billing guidelines. This was just the average – some companies actually realized legal spend reductions up to 10%. These savings are actual hard costs that hits the company’s bottom line. In the examples above, for instance, a 6% decrease in Citigroup’s litigation costs would result in $156m in incremental profitability for the quarter. Think that’s material to stock prices? You bet.
It’s time for companies to view ELM solutions as materially strategic to the company’s bottom line given that litigation costs eat up such a high percentage of total profitability, and ELM solutions have the most direct impact to lowering legal spend of ANY type of legal technology. For more information on Mitratech’s best-in-class integrated ELM solutions, contact us today for a value analysis that demonstrates the savings that your legal department can realize.