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LegalJune 29, 2021

Making the future brighter for your legal department

This year’s CLOC Global Institute virtually brought together experts from across geographies and industries to share their legal operations knowledge with attendees. One session, called Shaping the Future of Your Legal Department, provided a deep dive into some findings from the 2021 EY Law Survey, which was conducted in collaboration with the Harvard Law School Center on the Legal Profession. This session provided a wealth of valuable information – here are three key takeaways.

Workloads are growing faster than budgets

For years now, lawyers have been expected to “do more with less” and this isn’t changing soon. Expectations for the legal department continue to rise, but budgets generally are not doing so. The effects of COVID-19 on the corporate legal department added to this existing issue. For many, workloads increased during the pandemic as a result of legislative changes, additional disputes, and other COVID-related corporate activities that impacted legal teams.

This trend is expected to continue. Legal department professionals expect their workloads to rise an average of 25% over the next three years. And 76% of law department leaders report that managing their current workloads is already difficult. Meanwhile, 75% of law department leaders believe growth in workloads will outpace budget growth.

Legal departments need – and are developing – strategies to address this challenge. Because the increase in work is not expected to be accompanied by greater funding for most legal departments, many are seeking to make operational changes. Managing outside counsel more effectively and adopting technologies that increase efficiency are two methods that were covered in this session.

Outside counsel management is a savings opportunity

On average, half of legal department spend goes to outside providers. Over the last 25 years, the cost of hiring a lawyer at an outside counsel firm has risen more than twice as much as inflation. As a result of these large and increasing costs, more than half of law departments are seeking to reduce the share of budget they spend on outside counsel.

In the EY survey, 90% of law departments indicated they have challenges with outside counsel management. These include issues with billing guidelines, as well as the number of law firms they use:

  • 79% say billing guidelines are not detailed enough, while 85% report that providers don’t follow guidelines anyway.
  • 83% have too many providers to manage and 81% don’t have the necessary resources to manage them effectively.
  • 52% lack a performance management framework and 68% don’t have the data to properly assess provider performance.

If legal departments had comprehensive and effective billing guidelines, a reliable enforcement mechanism, and the right data and management resources, they would be better positioned to make law firm selections that consistently meet their legal and business needs.

Legal technology is largely underfunded

The right legal technology holds all up-to-date information in one place, providing access for even geographically distributed teams. It can also help legal departments better control spend and provides a powerful tool to help when negotiating rates with law firms. However, in the survey, 94% of departments said they do not have the data and technology needed to optimize their department. Although technology can help in these and other ways - by automating processes to add efficiency, capturing actionable data, making predictions about the results of various choices, etc. – obtaining funding for it remains one of the biggest challenges legal departments face in their efforts to transform.

The reasons for this are addressable, however. More than half of legal departments (57%) lack data or expertise to develop an investment case, while 63% report that the C-suite has other priorities. By developing new approaches to technology business case development, legal departments can find greater success in generating leadership support and winning the additional budget needed to improve performance.

This session was a significant source of data about the challenges facing corporate legal departments as they seek to continue meeting their organizations’ needs in a business environment that demands efficiency and cost control. For more information about how to demonstrate the value ELM can bring to your organization, download our whitepaper Building the Business Case for An Enterprise Legal Management System.

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