The results were reported in the Corporate Legal Operations Consortium’s (CLOC) 2nd Annual State of the Industry Survey (PDF), which examined “internal to external expenditure, legal operations headcount, technology and innovation, and Law Firm evaluations in its member companies.”
Jason Barnwell said dealing with legal operations’ evolution and challenges is largely a top-down endeavor. He is assistant general counsel-legal business, operations, and strategy at the Microsoft Corporation and a CLOC board member. “The core challenge for most legal operations professionals typically reduces to effective change management," he said. "The hardest part of the job is helping the people you serve embrace the future you have to offer. Everything else is secondary to that. The great news is that this is a very transferable leadership skill that creates some fabulous options.”
More than 200 companies in more than 30 industries were included in the survey, according to information from the consortium.
Respondents were responsible for more than $6.3 billion dollars in expenditures, and more than half of them said external spending on other law firms dipped or stayed at the status quo over the last two years. Implementing “alternative” fee arrangements and legal service providers, “preferred provider panels” or simply keeping the work in house were some of the strategies used to control spending.
Reportedly, $0.46 of every $1 spent by the corporate legal departments was dedicated to external legal costs. Further, according to information from the CLOC, legal operations professionals are growing as a percentage of their respective departments. Of those asked, 40% of the companies reported an increase in full-time attorney “headcount” last year and 37% of the companies “reported an increase in dedicated legal operations FTEs.”
Companies are also putting an emphasis on technology, with nearly three-quarters of respondents claiming they created a “technology roadmap,” according to the survey.
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But Mike Haven, the head of legal operations at Gap. Inc., and CLOC board member, said technology doesn’t accomplish much on its own. “Workflow automation, robotic process automation and machine learning all are promising technologies that can and will be leveraged in the legal industry of the future," he said. "But cool technology sitting on top of bad process will not be helpful. Beware the bright, shiny objects!”
Per the report, 45% of those asked said they are exploring the use of Artificial Intelligence to reduce work, improve performance and gain insight. However, only 12% are actively using the technology.
Many of those same sentiments were echoed in the Wolters Kluwer’s “Future Ready Lawyer survey,” reported on by Above the Law. In that survey, controlling outside costs and leveraging technology were both cited as top challenges for corporate legal departments. Per Above the Law’s report, Ali Butler, deputy general counsel at Wolters Kluwer said: “Law firms have to embrace (or continue to embrace) innovation and technology to help streamline their own legal work or they risk becoming uncompetitive.”