By: Mark Haddad, Thomson Reuters
It’s no secret that corporate legal departments are struggling to do more with less. In the aftermath of the 2008 global economic crisis, corporate counsel faced cost pressures and brought more work in-house. Today, legal departments continue to adjust to cost constraints while dealing with how to manage internal and external resources to achieve greater efficiency and productivity.
Some in-house leaders are adapting by hiring legal department operations (LDO) professionals to act as their change agents, according to the Thomson Reuters 2016 Legal Department In-Sourcing and Efficiency Report: The Keys to a More Effective Legal Department. The report, the second annual survey of 429 attorneys and operational professionals working in corporate legal departments, examined their ongoing efforts to improve efficiency and productivity across their in-house teams.
A backlash against operational and administrative work
The report revealed a rise in employing LDO professionals as a backlash against the time-consuming administrative work facing legal departments. Many departments reported being besieged by the operational activities that come with being part of a corporation and have made changes to keep up with these ever-increasing demands.
Survey respondents indicated that LDO professionals are fostering change through staffing strategies, by managing outside counsel and employing legal managed-services providers, as well as by identifying and deploying new technologies across the legal department. Bringing in LDO professionals to concentrate on business operations allows corporate counsel to focus on higher-value legal work. With more time dedicated to the practice of law for these corporate counsel, less work has to go to outside counsel.
Another upside of transitioning work to LDO professionals is that it enables corporate counsel to be more proactive and strategic in how they advise the business. Employing LDO professionals in order to allow attorneys to work more strategically may eventually become an industry standard that sees widespread adoption among legal departments.
The advantages of working more strategically
According to the Thomson Reuters report, more than 40 percent of legal departments indicated that the top benefit of being more efficient is being able to focus on more strategic work, while another 25 percent reported that it’s being able to focus on the legal aspects of their job. With operational responsibilities like internal financial planning and project management consuming legal departments, corporate counsel are eager to concentrate on the practice of law.
This comes as general counsel are increasingly called upon for strategic and business advice, not just legal advice, according to a recent survey from legal placement firm BarkerGilmore. The evolving role of the general counsel means that the function will extend beyond providing legal guidance to advising the board and the CEO. As the general counsel’s role continues to expand, legal departments will face more pressure to realize efficiencies, which will require a keen focus on driving greater productivity.
Be smart about using outside counsel
Department leaders are also improving efficiencies by keeping work in-house – particularly with certain tasks related to contracts, intellectual property, mergers and acquisitions, and litigation. Virtually all respondents agreed that some work is better suited for the in-house team. From a practical standpoint, given corporate counsel’s understanding of the business, it may be more cost-effective to keep certain matters within the department.
There are ways to be smart about using outside counsel as in-house teams consider how to best divide responsibilities related to contracting, intellectual property, M&A and litigation matters. For example, the report found that corporate counsel are spending more time handling contract, litigation and regulatory matters, as well as advising internal business clients. Looking a little deeper, the focus is on contracts, where being nimble and knowing the business is particularly meaningful.
People, process and technology initiatives
In addition to shifting work in-house, department leaders are introducing efficiencies across people, processes and technology. For example, the impact of business growth on already-stretched legal departments means that one of the areas hit hardest is staffing. Staffing challenges were identified by nearly 20 percent of respondents as a problem. Overall, just under a third of legal departments created new positions, both to bring work in-house and handle growth.
Beyond people and process initiatives, technology is a crucial component of departments’ efforts to improve productivity. Survey respondents’ top two technology priorities included migrating to electronic document storage and implementing knowledge management technologies, which shows they are keen to realize benefits such as spending less time to search for buried organizational knowledge, forms and templates – and consequently to be better positioned to leverage quality, existing work product.
In-house teams’ ongoing struggle to do more with less, while demonstrating their value to the business, means they are continually looking to better manage their internal resources, as well as outside counsel, to improve productivity and efficiency. Shifting work in-house, hiring LDO professionals and implementing new technologies are among the ways corporate counsel are adapting to cost pressures and seeing a greater return on total legal spend. Most promising is that several of these changes allow general counsel to work more strategically; fewer operational activities for attorneys means more time to focus on legal work.
Mark Haddad is the Vice President of Thomson Reuters’ corporate segment.