August 25, 2020
Thomson Reuters Institute’s Legal Department Operations Index Shows a 24 Percent Increase in Dedicated Operations Staff
Use of outside counsel, technology on the rise due to COVID-19
DALLAS, August 25, 2020 – Thomson Reuters Institute finds 81 percent of legal departments surveyed have dedicated legal operations staff, up from 57 percent, according to the fifth edition of the Legal Department Operations (LDO) Index. Over the course of the LDO Index, this is the first time the survey has seen a significant shift in how legal departments are operating.
Through qualitative and quantitative insights, the latest report looks at the operations of corporate legal departments and reveals the key priorities have remained relatively consistent. Two of the top priorities continue to be controlling outside counsel costs (89 percent) and a focus on internal security (74 percent).
Additionally, the next three priorities for legal departments are: driving internal efficiency (74 percent), using technology to simplify workflow (61 percent) and a focus on legal operations (52 percent). To simplify their workflow, nearly half (44 Percent) of legal departments have increased their use of technology tools in the last 12 months, while 30 percent have increased their legal technology budget.
Where technology can help legal departments be more efficient, the report found the following as top priorities:
- eBilling/Spend & Matter Management
- Contract Management
- Legal Research
- Document Management
- Legal Hold
COVID-19 also has had a significant impact on legal departments forcing adjustments in technology implementations. Twenty-seven percent of legal departments reported they were implementing more legal technology solutions due to the pandemic.
More than two-thirds (68 Percent) of legal departments report their volume of work has increased in the past 12 months. Tied to that, a large portion of legal departments (79 percent) reported an increase in workload due to the pandemic, while only 7 percent of legal departments reported a decrease in their workload.
In addressing the shift in type of work related to the current crisis, 35 percent of legal departments reported they have increased their use of outside counsel.
Additional key findings from the LDO Index Include:
- Thirty percent of legal departments reported increasing the use of alternative fee arrangements (AFAs) in the last 12 months, while the overall percentage of work under AFAs has remained consistent
- More than half (56 percent) of legal departments surveyed said it is a priority for them to use diversity data as a factor in outside law firm selection — up 9 percentage points from the prior year
“We weren’t surprised to see that in-house legal departments continue to experience pressure to do more with less,” said Carly Toward, proposition lead for Legal Departments at Thomson Reuters. “This is the first time, however, we have seen a significant change in how legal departments are operating and it’s clear legal operations teams are now an expectation for any modern legal department. COVID-19 also has placed a heavier burden on legal departments and it’s more important than ever for the legal function to demonstrate value through cost control measures and adoption of technology.”
The LDO Index includes Legal Tracker benchmarking data comprised of more than $90B in legal spending from more than 1,450 legal departments, as well as responses to a survey of legal departments using Legal Tracker conducted in June 2020. The survey received responses from 223 legal departments including 81 companies in the Fortune 1000.
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