How Parchment Reduced Legal Costs 50% While Growing Exponentially
“I was so tired of transactional legal services.”
The Challenge in Traditional Legal Services
Bob Colletti, CFO for Parchment, was frustrated with legal. It wasn’t that Parchment was getting bad service, or questionable legal advice. It’s that outside legal had turned into a major cost center for the growing company, with little in the way of adding real business value.
Parchment has been scaling steadily since the company’s inception in 2011. Outside law firms, Colletti knew, are mostly tactical. It’s about processing as many transactions as possible, and for law firms, is all about how many hours they can bill. From Colletti’s point of view, no one on their outside legal team was incentivized to get work done in the most efficient and intelligent way possible. They weren’t motivated to automate processes, and there was excessive overhead on repetitive things like managing the cap table, keeping contracts current, and other things that should have been scalable.
With legal costs mounting, instead of going the other way, and Colletti’s frustration mounting with it, he and Beth Lebowitz, founder of Nimbus Legal hatched an idea.
There Has To Be a Better Way
“I knew we really didn’t need full time in-house counsel at our size and stage in growth. And I knew that there had to be a way for our attorney to also contribute to bottom line success. Beth, as it turns out, had the same thought. In hiring her as outsourced general counsel, she solved not only the cost problem, she also solved the problem of having a transactional attorney vs. hiring a true business partner.”
Beth got to work in finding ways to streamlining many of the tactical legal processes. Her goal was to provide the most efficient use of resources while finding ways to impact growth. She implemented technology and documentation solutions that helped make simple transactions faster and easier to execute. She then looked at how things like executing sales contracts could be done in a more scalable and efficient way, which helped in closing deals. She automated everything she could to cut costs. And she worked closely with the executive learn to learn where legal could bring additional value inside the business.
“Beth turned legal from a cost center into part of our growth engine. Legal now directly impacts our revenue through better contract management, processes, and use of resources. That’s huge. That’s the difference between a business partner and a transaction-based, hourly-billing attorney.”
In the 3 years working with Beth, Parchment was able to reduce legal costs by more than 50%. During that same period, the company grew more than 50%.
“We grew faster than we ever had before, spending half as much on legal. Attorneys should be scratching their heads when they hear this. The traditional legal model is broken. Companies like ours are shifting our expectations of legal and our spend. Beth realizes this and that’s why Nimbus Legal is taking off like a rocket. I believe this is how legal services will be consumed across the board in the near future.”
The reduction in costs was a huge benefit to Parchment, but what Colletti believes is most valuable in the Nimbus model is the eye towards providing real business benefit. All attorneys that are outsourced as general counsel through Nimbus are committed to being part of their clients’ growth, not just keeping them out of legal hot water. Because Nimbus Legal GC’s only work with a few businesses at a time, they are totally focused on bringing the most value they can, in the most efficient way possible. Every client enjoys the benefit of what their outsourced GC learns from the other client’s they work with.
“It’s obvious that all of the Nimbus Legal attorneys are process driven, current in their methodologies, and business-focused.”
Ultimately, Nimbus Legal presented an innovative way of managing legal services that fit Parchments’ needs and the needs of similarly sized companies.
“It just doesn’t make sense for a company at our stage, economically, to use outside firms exclusively. And it also doesn’t make sense to have full time in-house counsel. That’s why Nimbus is so genius. There are millions of small businesses at our stage in the market that need exactly what Nimbus Legal offers.”