US corporate legal departments continue to battle with a budget squeeze, highlighting cost controls and technology, according to the third edition of the Thomson Reuters Legal Tracker Legal Department Operations (LDO) Index. Sixty-eight percent of legal departments surveyed report the volume of work, defined by legal matters, is increasing, but only 35 per cent of legal departments report an increase in department budget over the last 12 months. Additionally, 25 per cent report a budget decrease, while 40 per cent report their budget remains flat.
According to the report, the top initiatives for legal departments are controlling outside costs, using technology to simplify workflow and manual processes, internal data security, legal operations, and, the drive for internal efficiency in the delivery of legal services. Other priorities are allocating work to law firms that are proactive in showing their value, managing litigation holds with technology, external data security focus on outside counsel security practices, bringing more work in-house, and, using business intelligence to inform decision making.
Based on external spend, 57 per cent of legal departments that spend $15 million to $50 million have dedicated legal operations staff. That rises to 71 per cent of legal departments with a spend of $50 million or more. However, the number of internal headcount devoted to legal operations is, on average, largely staying flat (77 per cent), with 19 per cent saying that their headcount will grow and 5 per cent saying that it will decrease. However, amongst large corporate teams 42 per cent reported their legal ops headcount is increasing. Fifty four percent of organisations said they have increased the percentage of work handled in house in the past 12 months, and 37 per cent have increased the number of in-house attorneys. However, 48 per cent have also increased their outside counsel spend.
Forty five percent of corporate legal teams reported increasing usage of legal technology. However, when it comes to the budget for technology, just 35 per cent report that they are increasing the budget, 52 per cent are flat, and 13 per cent said that their technology budget is decreasing. The top technology solutions utilized by legal departments include e-billing/spend and matter management, document management, legal hold, e-discovery, and legal research. The top emerging solutions they are seeking to procure include document management (20 per cent), contract lifecycle management (18 per cent), legal workflow automation tools (15 per cent), and knowledge management (15 per cent). Litigation hold technology is a key priority for 59 per cent, with 83 per cent of large legal departments identifying use of legal hold technology as a key priority.