The hidden costs of doing legal work internally, and how to fix them
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Financial institutions often assume that handling legal work internally, relying solely on in-house counsel, maximises control and minimises risk. The reality can be very different, with hidden costs in time, money, and opportunity quietly eroding the ROI of the legal department, slowing business operations, and exposing institutions to avoidable risks.
At DRS, we’ve seen first-hand how internal legal teams face mounting pressure to do more with less, all while navigating an increasingly complex regulatory environment. This post outlines the real cost drivers of internal legal work and presents a clear playbook to eliminate waste, accelerate cycle times, and free up legal teams to focus on high-impact initiatives. Our approach blends process redesign, cutting-edge technology like our AI-powered Ark 51 platform, and strategic partnerships with ALSPs like DRS.
The three stealth taxes of in-house legal work
1. Inefficiency overhead: manual bottlenecks and duplicated efforts
When NDAs, Terms of Business reviews, and ISDA negotiations all pass through the same overstretched legal team, choke points inevitably form. Lawyers lose hours to formatting, redlining boilerplate, and chasing approvals; tasks which are ready for automation. Industry benchmarks suggest legal departments waste up to 30% of counsel time on non-legal tasks, which can translate into millions in hidden payroll costs.
Without centralised clause libraries or standardised playbooks, lawyers frequently recreate content from scratch, duplicating a lot of effort and introducing inconsistency. Every extra revision cycle adds days to turnaround times, frustrating business stakeholders and undermining the legal function’s strategic role. With Ark 51, clause extraction and document automation eliminate this inefficiency by putting structured, reusable content at your team’s fingertips.
2. Capacity drag: peaks, troughs, and headcount imbalance
In-house teams often suffer from high and low workloads. When a regulatory change , firms scramble for overtime or temps. During quieter periods, expensive legal talent is under-utilised. In London, the fully burdened annual cost of a mid-level counsel can exceed £120,000, but inconsistent demand means this investment often delivers uneven returns.
These fluctuations – whether it’s burnout during peaks or idle capacity during troughs –don’t show up in headcount reports but significantly impact profitability. DRS helps clients smooth these imbalances through scalable ALSP partnerships that expand, and contract based on real-time demand.
3. Opportunity cost: strategic work deferred
Every hour your legal team spends redlining an NDA is an hour not spent advising on product strategy, navigating regulation, or negotiating high-value deals. This deferred strategic work is often invisible to leadership but highly visible when innovation lags or compliance risks materialise. By offloading routine tasks to Ark 51 and DRS, in-house teams can reallocate their bandwidth to where it matters most.
Diagnosing your true legal cost with data
Before you can fix hidden costs, you must expose them first. Leading legal operations teams measure two critical metrics for every matter:
- Total cost (factoring in time, salary, and overhead)
- Cycle time (from intake to completion)
Start by pulling data from your matter management or e-billing systems:
- Matter-type cost analytics. Track average cost per NDA review or ISDA negotiation. Identify outliers that consistently overrun internal benchmarks.
- Cycle-time dashboards. Break down each process into intake, drafting, review, and approval. Identify bottlenecks-often 80% of delays occur in just one or two stages.
Instead of vague justifications for more headcount, imagine saying: “We spent £2.4 million on NDAs last year with an average turnaround of 12 days. 30% slower than target.” With metrics like these, it becomes far easier to drive change and secure buy-in.
A three-pronged fix: process, technology, and ALSPs
1. Process redesign: standardise and simplify
Begin by mapping your highest-volume workflows (NDAs, ISDA reviews, contract renewals). Simplify approvals, eliminate unnecessary legal touches, and introduce standardised clause libraries. DRS supports clients in designing lean, repeatable processes that ensure quality without unnecessary complexity.
2. Technology enablement: automate the mundane
This is where Ark 51 excels. Our AI-driven platform, reads, digitises and automates clause extraction -reducing manual work and accelerating output. Early adopters report:
- Up to 70% faster document reviews
- 50% fewer manual errors
3. Selective outsourcing to ALSPs: scale intelligently
Once your processes are standardised and tech-enabled, identify the remaining high-volume, rules-based tasks-perfect for ALSPs like DRS. Begin with a pilot define clear SLAs on turnaround and quality, and use a simple performance dashboard to track results.
Embedding change and scaling results
Transformation doesn’t stick without structure. Set up a Legal Operations “pod” with your internal lead, a DRS account director, and a customer success manager from the Ark 51 team. Meet regularly to review metrics, troubleshoot issues, and plan further rollouts. Highlight wins – such as a new deal signed faster thanks to improved turnaround.
Then expand move from NDAs to ISDAs or GMRAs, and from point solutions to end-to-end managed services. Continually improve your clause library, retrain AI models using new data, and involve DRS in innovation workshops to push your legal operating model even further.
Conclusion: from hidden drain to strategic engine
By surfacing the hidden costs of internal legal work-and fixing them through process optimisation, technology like Ark 51, and smart ALSP partnerships with DRS – legal departments can reduce waste, accelerate business, and recapture their strategic value.
What starts as a cost-saving exercise quickly evolves into a competitive advantage. Legal transforms from a bottleneck to a growth partner.
For senior management, the takeaway is clear: the next wave of efficiency and value in legal won’t come from hiring more lawyers – it will come from running a smarter legal function. The hidden costs are real, but so are the solutions. It’s time to fix them.