According to the latest Corporate Legal Operations Consortium (CLOC) survey, corporate legal departments experienced growth in demand for legal services and continued to focus on various means to control costs. Many grew their legal operations teams and continued to invest in technology.
The CLOC 2nd annual state of the industry survey which compared internal to external expenditure, legal operations headcount, technology and innovation, and Law Firm evaluations in its member companies. The sum of all external expenditure submitted by respondents totaled over $6.3 billion for the 200+ companies who participated in the survey. Over 50 percent of respondents reported that their external expenditure on law firms either decreased or stayed the same from 2017 to 2018. The average total legal spend as a percentage of revenues is 0.44 percent. Companies reported using a number of techniques to control their overall costs including leveraging alternative fee arrangements (AFAs), preferred provider panels, alternative legal service providers, and moving more work in house. Legal operations professionals are accounting for a larger portion of their departments as the function grows in scope and new roles are added. Of the companies that participated, 40 percent reported an increase in full time attorney headcount in 2018 and 37 percent reported an increase in dedicated legal operations FTEs. Legal operations functions continue to have a strong focus on technology to improve transparency and data analytics, efficiency, quality and consistency of work, and speed of execution. 72 percent of respondents reported having a technology roadmap. Companies with a developed technology roadmap spend 3 times more on technology than organizations that don’t have a roadmap or those still developing a roadmap.
General counsel views
According to Jason Barnwell, 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. 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.” Mike Haven, senior directory, AGC and head of legal operations at Gap Inc, and CLOC Board Member, urges caution in adopting new technology, “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. But cool technology sitting on top of bad process will not be helpful. Beware the bright, shiny objects!” CLOC’s president Mary O’Carroll, who also holds the role of director legal operations at Google, said “This year’s data shows that the role and function of legal operations continues to grow,” adding “Technology is changing quickly and more legal operations departments are embracing solutions to improve productivity and results.”