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Metric of the Week (#2): Total External Spend by Vendor (TESV)


Legal Operations KPIs - Total External Spend by Vendor

Definition

The 'Total External Spend by Vendor' metric is used to identify key influencers in the legal department's total external expenditure. This analysis includes a breakdown of spend across law firms, ALSPs, and any other external vendors.



Total External Spend by Vendor Sample Charts

When reviewing TESV, often by applying the Pareto principle (the 80/20 rule, which states that roughly 80% of effects come from 20% of causes), you may find that a small portion of vendors drive the majority of costs. This insight may empower the legal department to focus its attention on these top vendors, for various strategic initiatives, such as relationship management, risk management, and negotiating service costs.


Data Sources

External spend data can be sourced from invoices, e-billing systems, and matter management or vendor management systems containing essential vendor information, including matters, fees, and expenses.



Filters

  • Business Unit

  • Practice Area

  • Location/Jurisdiction

  • Others 



Limitations

The Pareto principle may not always apply, especially when multiple law firms are engaged due to the nature of legal matters, regional complexities, or the need for specialized expertise. Analyzing these factors can reveal opportunities for cost-saving through vendor consolidation, which can simplify management and reduce expenses.


For a deeper dive into this metric and other KPIs, be sure to check out The Legal Operations KPIs book on Amazon in English / Spanish or eBook on Google Play English / Spanish. It offers comprehensive insights and detailed explanations of over 80 metrics and KPIs to help you optimize your legal department's performance.

Visit LegalOpsKPIs.com for more information, exclusive resources such as expert interviews, a chart library, Excel templates, and to connect with a global community of professionals committed to advancing Legal Operations through data-driven insights.



InfiniGlobe is a full-service consulting and software company. We have 20+ years of industry experience working with top corporate legal departments and law firms. Contact us at info@infiniglobe.com or at (833) LGL-TECH.

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