Business training seminar
LegalJanuary 08, 2021

CLOC 2020: COVID forces legal to grow up, become more institutional, more tech-enabled

The 2020 CLOC conference on November 10th drew attention to a number of trends, some new, and some that have been around but are gaining momentum. Whereas the conference previously spanned multiple days, this year it lasted only one day. That change may have been a benefit that allowed a focus on quality over quantity. If I were to describe a theme of the presentations I saw, I would say the industry is slowly shifting from an ad hoc, informal way of doing business to a new way of thinking. This new approach is characterized by strong central control reflecting goals that go beyond individual personalities, and even law department priorities, to align with the larger client organization. None of this is particularly surprising, since this shift was already evident prior to COVID-19 and there is every reason to believe that COVID-19 will only accelerate it.

Here are three main takeaways:

Diversity, diversity, diversity

A number of the sessions touched on the issue of diversity, and a few focused on it extensively. Diversity is by no means a new topic in the legal profession. However, some experts believe that legal remains the least diverse profession around, in multiple ways. Historically, there has been a whole lot of talk about diversity and quite a bit of activity, although most of that activity appears not to have been particularly productive. There is also concern that COVID-19 might not only cause progress on diversity to temporarily cease, but to actually reverse the gains of the last couple of years, as happened after the 2008 crisis (see page 12 of this report).

Fortunately, some organizations are taking a more aggressive approach, which presents better chances of keeping up with that progress on diversity. Particularly, Corporate Legal Departments (CLDs) should look to organizations like Accenture—who spoke about diversity at the CLOC conference—and Intel. Accenture has done a number of things to promote diversity, including implementing the Mansfield Rule, which requires a certain percentage of candidates from underrepresented groups to be interviewed for job openings. CLDs can implement this rule in their own hiring and can urge their firms to use it. Some may even refuse to hire firms that do not have the Mansfield Rule in place. Perhaps an even more aggressive approach is being taken by Intel, which has said that on January 1, 2021 it will not retain law firms that fail to meet certain diversity targets.

Growing interest in demand management and matter intake

Historically, most CLDs made almost no attempt to track incoming legal work and source it in a logical way. Instead, legal service requests would come in through a crazy-quilt of phone calls, emails, text messages, and in-person meetings and were insourced or outsourced in a way that reflected the personal philosophies of individual in-house counsel more than organizational preferences. That is changing. To be sure, on an industry level change will be slow, but it is happening quickly in a few organizations and—if implemented widely – packs enough punch to distort the industry significantly.

Accenture briefly spoke about its demand management approach in the context of diversity, and specifically said that it requires inside counsel to document answer to three questions prior to hiring outside counsel:

  • Did inside counsel ask the firm to staff a diverse team and matter lead?
  • Did the firm offer these?
  • Did inside counsel select the diverse team and matter lead that was offered (if any)?

This approach is important because it helps the organization identify where pressure is needed, but also has broader applications. For instance, one large Wolters Kluwer client requires that matters be scored for risk and uses a tool that suggests (though does not mandate) a slate of outside providers that the organization has deemed appropriate for the specified matter type and level of risk. Over time, this approach should allow the organization to track whether inside counsel are hiring the firms suggested and approach them if they routinely select counsel that do not appear appropriate.

Yet another Wolters Kluwer client is taking an even more radical approach by putting rails on how matters are sourced depending on specific characteristics. Contrary to the traditional approach of hiring outside counsel by default, matters are insourced unless certain exceptions necessitating outside counsel are specified. Then the assignment must go to a panel of very inexpensive providers. There are a number of more expensive provider tiers, which cannot be accessed unless the use of less expensive tiers is rebutted at each and every level. The organization implemented this system to end a pattern whereby in-house counsel defaulted to hiring AmLaw 50 and higher firms, even for garden-variety legal matters where that level of cost seemed out of proportion to the risk involved.

Removing humans where they aren’t necessary

Multiple organizations at the conference were frank about the fact that they don’t plan to lay people off, but will not replace positions that open through retirement. Instead, they will emphasize, for example:

  • Self-service portals and expert systems that answer users’ legal questions without having to interact with humans
  • Interoperability between multiple systems to eliminate the need for manual data synthesis or upload
  • Eliminating manual steps in the contracting process, including conducting the entire process through contract lifecycle management systems that include e-signature
  • Finding ways to recycle legal work that was already done, rather than duplicating work over and over

There were a number of other interesting presentations at the conference that are beyond the scope of this article, but none contradicted the general theme of the legal industry becoming more like a business. CLD’s are larger and more global than ever, as are law firms, and have achieved sufficient scale to manage via formal processes and controls as a supplement to the judgement of individual personalities. This transformation already happened in most other areas of business, and the CLOC conference, unsurprisingly, confirms this trend remains alive and well.

Nathan Cemenska
Director of Legal Operations and Industry Insights

Nathan Cemenska, JD/MBA, is the Director of Legal Operations and Industry Insights at Wolters Kluwer's ELM Solutions.

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