Corporate Legal Departments Seeing Greater Value From Their Outside Counsel, Says 2018 State of Corporate Law Departments Report

Corporate legal departments are seeing greater value for the legal services they receive from their outside counsel, according to the 2018 State of Corporate Law Departments Report from Thomson Reuters and Acritas.

The report analyzed data and research from Thomson Reuters Legal Tracker, Acritas and the Corporate Legal Operations Consortium (CLOC).

The average satisfaction rating of outside counsel based on value has increased 9 percent over the last five years showing improvements across all areas of service delivery, according to the report. This is of utmost importance to firms, as legal departments said allocating work to firms that are proactive in showing their value is one of their top priorities. 

At the same time, controlling outside counsel costs is the number-one priority for corporate legal departments, and as a result they are moving more work in-house and increasingly turning to technology and a focus on legal operations to drive efficiency.

The report showed legal departments increased the allocation of their legal budget to in-house legal work to 43 percent, on average, in 2017, up from 37 percent in 2013. Conversely, they spent 57 percent on outside counsel, down from 63 percent in 2013.

In addition, slightly more legal departments are reducing rather than increasing the number of firms they work with. Fifty-three percent of legal departments have reduced their roster of outside firms over the last four years, working with a median of 16 firms. At the same time, 43 percent have grown their outside counsel ranks, with a median of 17 firms. 

These five goals were listed most frequently by legal departments as a high priority:

Controlling outside counsel costs

76%

Using technology to simplify workflow and manual processes

41%

Focusing on internal data security

41%

Focusing on legal operations

30%

Allocating work to law firms that are proactive in showing their value

29%

 

For controlling outside counsel costs, use of alternative fee arrangements (AFAs), strict enforcement of billing guidelines and the reduction of invoice expenses were most frequently named as the “most effective” steps.

Using technology to simplify workflow and manual processes was rated the second-highest priority. But only two in five departments perceive themselves to have innovated the way they handle legal work in the last year. The main areas of innovation were in developing systems — contract management, project management, e-billing and document management.

Legal operations is increasingly a focus for law departments, with 51 percent having dedicated legal operations roles. Seventy percent of legal departments say legal operations is either a high or a medium priority. A focus on internal data security also is a top priority, with 66 percent of organizations rating it as either a high or a medium priority.

“Corporate legal departments are adjusting to deal with dynamic business and shifting legal landscapes,” said Chris Maguire, managing director of the U.S. Corporate segment, Thomson Reuters. “Rapidly growing global regulatory requirements, new security threats and challenging business goals are causing legal departments to be more operations focused in their approach. Increasingly, they are looking to leverage technology to improve efficiency, reduce costs, and better manage risk and compliance.”

“Modern legal departments are becoming much more proactive in their roles within the organization,” said Lisa Hart Shepherd, chief executive officer of Acritas. “They seek to add value to the organization, rather than be viewed as a cost center. As such, many are promoting a culture of ongoing improvement and innovation, and leveraging data-driven decision-making to enhance their role in supporting their organizations. Measurement is a critical resource for the modern legal department and our research has identified 21 key metrics that departments should consider tracking.”

Register for our LIVE WEBINAR, “2018 State of Corporate Law Departments” on Thursday, Feb. 8 at 17:30 pm, GMT

The 2018 State of Corporate Law Departments Report can be downloaded at: http://legalexecutiveinstitute.com/2018-corporate-law-departments-report/

or by the below form

Get Involved

Acritas can provide further benchmarking data on other topics such as, legal spend and remuneration on its online platform for legal departments. We provide this for free as an incentive to participate in our global research in return for participating in a 25-minute Sharplegal telephone interview discussing your perspectives of the legal services market. The Analytics tool also provides access to a database of exceptional Star Lawyers, as recommended by other survey participants, across more than 50 countries worldwide. You can see why the Star is recommended and the demographics of the client making the nomination.

To participate and access Acritas Analytics, please email appointments@acritas.com with your preferred time and phone number. You must fit our qualifying criteria to gain free access which includes a minimum revenue of $50m and being a decision-maker when it comes to procurement of legal services. Paid access is available for $995 per annum.

For further information on how Acritas can help you and your organization, please contact Lizzy Duffy on eduffy@acritas.com or +1 646 480 5738 or Jo Aitken on jaitken@acritas.com or +44 808 178 3020.

Website by PeacockCarter Ltd