Legal teams are turning to technology and data to mitigate risk, address changing business needs and control costs, according to Thomson Reuters “2020 State of the Corporate Law Departments Report”
Dallas, TX (April 21, 2020) — Corporate law departments are under increasing pressure to meet growing demands for in-house legal professionals’ time, while needing to cut departmental spending and confront changes in legal technology and process innovation — a situation that has been further intensified by the advent of the COVID-19 outbreak and ensuing economic uncertainty.
These are among the findings published in the 2020 State of Corporate Law Departments: Effectiveness, Efficiency & Expanding the Guardian Role, Thomson Reuters latest annual report on the trends and solutions for corporate legal professionals and departments. The report was developed by the Thomson Reuters Legal Executive Institute and examines quantitative benchmarking from Legal Tracker, a qualitative survey of Legal Tracker customers and Acritas phone interviews with senior in-house legal counsel that was conducted in 2019.
According to the report, corporate law departments have three key priorities:
- 26 percent said they want to safeguard their company
- 44 percent said they want to increase efficiency
- 50 percent said they want to improve functional effectiveness
In order to take into account how COVID-19 has impacted corporate law departments, researchers conducted follow-up interview with general counsels, finding that while the implementation of some projects have been put on hold, many strategic priorities remain the same.
Safeguarding the Company
Corporate law departments’ role in safeguarding the company goes beyond just mitigating a rising legal threat or regulatory entanglement. Safeguarding means ensuring the sustainability of the company and its business model and working in a way that gives the company the ability to face changing regulations and new risks — such as cybersecurity, data privacy and the economic impact of COVID-19 — which are among the top concerns for many departments.
During times of economic uncertainty, legal leaders want their teams to protect their companies against an ever-increasing number of risks, while also promoting the overall health of the company. In addition, they must accommodate ever-evolving changes in legal technology and process innovation, all while controlling costs.
Corporate law departments continue to face pressure to find innovative ways to reduce costs. The adoption of new legal technology and innovative processes can help law departments transform how they function and become more successful. Nearly half of those surveyed (44 percent) said increasing efficiency was a strategic priority, and controlling costs was the primary goal for 21 percent of respondents. Ninety percent of Thomson Reuters Legal Tracker participants said controlling outside counsel costs was a top priority and 41 percent said that bringing more work in-house was a priority.
In other findings, the portion of legal spend that in-house legal departments allot to external law firms has increased, even though 41 percent of respondents say they want to bring more work in-house. Spend varies by department size, but 12 percent more law departments said they are planning to increase their total legal spend in the coming year than those that said they are planning to decrease it.
It is not surprising that firms are turning to technology. Seventy percent of the Legal Tracker study participants say that using technology to simplify workflow and manual processes is a top priority.
Despite the pressure to increase efficiency and reduce costs, many companies are not tracking key financial metrics. A recent NYSE survey reported that more than three-quarters (77 percent) of companies said they don’t measure the value delivered by their legal department. And according to the 2020 LDO Index, fewer than 20 percent of companies track savings generated from bringing more legal work in-house or using legal technology.
Improving Functional Effectiveness
Even before today’s crisis, corporate leaders had placed a lot of pressure on in-house law departments to collaborate with other departments and functions. In addition, the report states that company leaders are requesting that their legal departments adapt to changing priorities and expand into new areas, such as risk management, cybersecurity and auditing. Taking on these new responsibilities has a major impact on their ability to improve effectiveness.
More advanced departments are leveraging data analytics and technology to use their resources more effectively. Legal tools — including matter management, contract life cycle management, document management and legal project management — can increase quality and functional effectiveness, as well as efficiency, by imposing discipline, standards and consistency in work processes.
The more law departments can use technology to manage legal workflow, the more they can measure and report on workload, turnaround time and exposure — and do this in a way that aligns with their companies’ priorities.
“In-house legal departments are increasingly taking a broader operational view to change current processes,” said Chris Maguire, General Manager, Corporate Legal Software, Compliance and Risk for Thomson Reuters. “This presents a challenge, but also an opportunity, to use technology and data analytics to identify and improve processes to maximize efficiency and effectiveness, while continuing to deliver on the core duty to safeguard the company.”
The report can be downloaded here.
To learn more, register here for the May 7th webinar entitled, “2020 State of Corporate Law Departments: Identifying Your Department’s Priorities for 2020.”
About Thomson Reuters
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For more information on Acritas, go to acritas.com.