June 5, 2017
Corporate legal departments facing more work, employing more cost controls, says Thomson Reuters Legal Tracker LDO Index
Report details more use of outside counsel, legal ops, and technology
Eagan, Minn. – Corporate legal departments are facing a growing volume of work, and responding with cost controls and more use of legal operations personnel to improve efficiency. That’s according to the Thomson Reuters Legal Tracker LDO Index, a new semi-annual report based on anonymized data from over 1,000 legal departments.
Sixty-two percent of legal departments report that the number of legal matters has increased in the last six months. Legal departments are responding in a number of different ways, using in-house resources, and expanding use of outside counsel, technology, and legal operations to manage the increased workload.
While fifty-two percent of legal departments increased the percentage of work handled in-house in the last six months, only twenty-eight percent increased the number of in-house staff during the same time period. Meanwhile, legal departments are increasingly turning to outside counsel: Nearly half of legal departments (45%) increased outside counsel spending in the last six months, while only thirty-three percent reported a decrease. On average, legal departments engaged 1.6 law firms per million dollars in legal spend.
The report separately surveyed 161 legal departments on their use of cost controls. They ranked the following cost controls as being the most effective:
- Auto-reduction of invoice expenses
- Required law firm matter budgets
- Fixed/flat fee set at matter level
- Volume discount
Legal departments are also increasingly turning to use of legal operations professionals and technology to improve efficiency. Fifty-one percent of legal departments now have dedicated legal operations staff. In addition, thirteen percent of legal departments increased legal operations staff in the last six months, while only six percent decreased staff.
Eighteen percent of legal departments increased their spending on technology, while twelve percent spent less.
“Corporate legal departments are shifting how they manage their legal spend, becoming much more pro-active and sophisticated in their strategies,” said Eric Ruud, managing director, Legal Enterprise Solutions, Thomson Reuters. “The entire legal ecosystem is evolving rapidly as organizations face greater pressure to increase efficiency and maximize cost-effectiveness. Many legal departments are now optimizing their legal spend by employing a variety of approaches, including greater focus on legal operations, effective cost controls on outside counsel, and more use of technology. We look forward to tracking these trends and applying qualitative and quantitative insights to help legal departments better understand how they and their peers are managing in an increasingly challenging environment.”
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