September 21, 2021
Thomson Reuters Institute 2021 Legal Department Operations Index Shows 82% of Organizations Are Focused on Managing Outside Counsel Legal Spend
Majority of corporate legal departments are also increasing use of technology to simplify workflow and see internal data security as high priority, according to sixth annual LDO Index
DALLAS, September 21, 2021 – The sixth edition of the Legal Department Operations (LDO) Index by the Thomson Reuters Institute, focuses on developments in three crucial areas of legal department operations––spending, technology, and department management. The survey found organizations are looking closely at spend on outside counsel with 87% indicating it as a high priority and 82% of legal departments identifying themselves as proactive, optimized, or predictive in their approach to controlling costs this year. The new report also shows the most-cited metric being tracked by legal departments is total spend by law firm, followed by practice area, and then by matter type.
In addition to controlling outside counsel costs, legal departments ranked the following as high priority:
- Using technology to simplify workflow and manual process – 74%
- Focus on internal data security – 73%
- Focus on legal operations – 59%
Key Technology Findings
- Legal technology adoption is expanding with more than half (52%) of the legal departments surveyed having increased their use of legal technology over the past year.
- The top-ranked valued technologies for legal departments included:
- eBilling/Spend & Matter Management
- Legal Hold/Litigation Hold
- Legal Research
- Document Management
- With Legal Business Intelligence/Dashboarding/Analytics being ranked the most underutilized technology (37%).
“It’s great to see the adoption of critical legal technology is expanding, as departments look to enhanced software solutions and digitization to both improve efficiency and lower department costs,” said Hillary McNally, General Manager for Corporate Legal at Thomson Reuters. “Based on these findings, it's clear that for most legal departments, spending, technology, and department management, are ripe for improvement and development.”
Additional key findings from the LDO Index Include:
- Legal departments showed the use of alternative fee arrangements in some capacity (usually up to 20% of overall legal work) continues at most companies.
- 80% of departments responding to our survey indicated they now have staff dedicated to the department’s legal operations function.
- As diversity and inclusion efforts continue to grow in importance, the percentage of legal department respondents saying they do not have an initiative to require diversity information from their outside law firms fell to 42% in the latest report, compared to 77% in the 2017 report.
The data in this report is comprised of real-world legal spend analytics gathered from Thomson Reuters Legal Tracker and sourced from more than 1,500 corporate legal departments. Added to that data is a Thomson Reuters survey, conducted in June 2021, in which 100 legal departments responded. Throughout the report companies are referred to as Large, Medium, Moderate & Small. These designations are based on the company’s annual revenue.
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