Are Law Department Priorities Shifting During the Pandemic?
Law departments face two long-standing trends. First, General Counsel (GC) increasingly serve as strategic business leaders rather than as law department managers. Consequently, they rely on the legal operations team to manage their teams and provide analysis and reports that inform guidance and risk management for the CEO and the board.
Second, they must do more with less. The COVID economic crisis has only exacerbated that mandate. PwC in a June 2020 report predicts “a return to heavily stretched legal teams and budget pressure” and that law departments “are going to need to defend the value of their output more than ever.”
The chart below quantifies the impact of this pressure. The data is from a weekly poll by the Legal Value Network (LVN) of law firm value and pricing professionals. With 10 large law firms participating in the poll, each reporting on their overall read of multiple clients, the data synthesizes many law departments’ situation: fee pressure has increased, and cost control has become even more critical.
The pandemic has also created new types of pressure, well stated by Rebecca Benavides, Director of Legal Business for Microsoft Corporate, External, and Legal Affairs, when she recently said:
“As we all continue to work from home with our professional and personal lives blending together and competing for our attention, the ability to prioritize efforts, automate workflows and make room for more strategic efforts will be critical.”
(American Lawyer, June 26, 2020)
In-house counsel and legal operations professionals can help address this new pressure by using technology to coordinate and collaborate instead of relying on in-person meetings and conversations.
A Renewed Priority: Doing More with Less
CLO Survey Shows Cost Control Opportunities. Legal consultancy Altman Weil surveys Chief Legal Officers every year. A question in the current survey (2019) asks about cost control tactics. The chart below shows that over 75% of these tactics used by law departments have “significant impact.”
Though the cost control impact (the line in the chart) is high, law department adoption (the bars) was relatively low in 2019, with only a couple breaking 50%. That means many law departments still have room to pursue the tactics highlighted in the chart:
Enforce outside counsel budgets
AFA + fixed fees
Use lower-price firms
Reduce fee for portfolios
Bring work in-house
Taking Advantage of Cost-Saving Opportunities Requires the Right Tools. Effective adoption of these tactics requires using the right software, particularly e-Billing and invoice review software. That may seem obvious but the 2019 Corporate Legal Operations Consortium (CLOC) survey found that 22% of law departments do not have e-Billing systems. Without a solution in place, in-house counsel and legal operations professionals have no systematic way to manage and track their outside counsel spend.
Law Departments Must Also Use Their Tools Effectively. For the almost 80% of departments that do have e-Billing systems and other outside counsel management tools, they must use them appropriately to boost savings. This is not the place for a complete guide to cost-savings, but a few examples illustrate potential ways to close the gaps seen in the chart above:
To enforce outside counsel billing guidelines, legal operations professionals can configure rules in e-Billing review systems to flag and/or reject (pending further discussion) time entries and expenses that do not comply with the guidelines.
E-Billing software can help identify firms with lower billing rates within the same types of work, meaning the ability to discover firms that may offer a better value.
Using benchmark data of law firm billing rates in combination with e-Billing analytics, law departments often identify rate negotiation opportunities. (Our freely available Enterprise Legal Management Trends Report provides insight on rate spreads across firms for a dozen practice areas.)
New Priority: Coordinate, Collaborate, and Go Digital
We share some of the evidence of the trend that Ms. Benavides of Microsoft® pinpointed in the introduction’s quote.
Using Tech to Manage Work Instead of Managing by Walking Around
With Workers Dispersed, Managing Matters Requires a More Systematic Approach. We have talked to our customers and other law departments throughout the initial lockdown and gradual return to work. With lawyers and staff dispersed, the need to monitor and allocate work systematically has grown. Pre-crisis, when the GC, Deputy GC, or head of legal operations could walk the hall and talk to their team members, they could easily and quickly gauge work levels informally. Now, it is more difficult to do a quick check-in. Consequently, law departments need more systematic approaches to intake, allocate, and monitor legal requests and matters.
Systematic Intake and Workflows Help to Stay Coordinated. Software tools with workflow features and the ability to track all legal requests, whether handled internally or sent to outside counsel, help solve the coordination challenges. Tracking all incoming requests helps make sure all are handled and can help balance workloads. Workflows embedded in software automatically route tasks to the appropriate person, reducing the number of touch points and clarifying who owns the next step. These systematic approaches can substitute for—and actually improve on—the historic approach of managing by email, phone, and dropping by someone’s desk.
More Systematic Document Management
Many Law Departments Struggle to Manage Documents, Especially Now. Most law departments, unlike large law firms, lack dedicated document management systems (DMS). The latest CLOC survey found only 53% of law departments have a DMS. This confirms stories we hear (both pre-pandemic and now) of even large law departments relying on network drives. We emphasize the plural because with multiple drives, finding someone else’s work product, or even knowing it may exist, is next to impossible.
Dedicated DMS is Not Required to Solve the Problem. Licensing a stand-alone DMS is not necessary to solve this problem. With the right enterprise legal management (ELM) software, law departments can manage not only matters and spend but also documents. For example, CounselLink® allows creating a central document repository to easily manage and share documents. An advantage of using an ELM that includes a DMS is that everyone in the law department can go to one place for both matter information and relevant documents. Unlike with a dedicated DMS, working in an ELM means matter information and documents are never more than a click away, in the same system. We see a growing recognition of this in the market. Aside from the immense benefit of consolidating relevant information into one place, this approach also reduces total licensing costs.
Demand Has Soared to Learn Systems
One sign of the increased emphasis on using existing tech is the very high level of interest we have seen in our various virtual training events. Lawyers and legal professionals are generally reluctant to attend any tech training, especially if there is no CLE credit offered. Now we see the opposite: Our customers and prospects want to understand how to better use CounselLink. Attendance at our virtual events during the crisis has been much higher than in the past for comparable events, and most attendees stay the full session. We believe that reflects recognition of the need to rely on tech in lieu of “managing by walking around.”
Paperless at Last
Without Industrial-Strength Printers, Invoice Review Takes Place On-Screen. Many have talked about going paperless for decades but now it’s really happening. When lawyers and legal operations professionals worked in offices, they could print bills to review them. Given the volume of invoices in most law departments, and the many pages per invoice, printing them on home office printers is not realistic. Our customers and usage statistics now show a much higher reliance on solely digital review.
Digital Review Also Offers Better Security. Beyond substituting for paper, going digital also offers better security and protection of attorney-client privilege. A recent article reported that “Clifford Chance and DWF have banned their lawyers from working from printed documents during the coronavirus pandemic, as other firms implement new measures for hard copy usage while their lawyers work from home.” (Legaltech News, June 25, 2020.) The article continues to explain that client confidentiality “is at the heart of many of these measures.”
Value of Cloud Deployment Highlighted with Remote Work
The benefits of enterprise legal management software—in fact, any software—depend on users being able to access it. The COVID crisis, with extensive remote work, illustrates the value of cloud deployments, which allow use from any Internet-connected device. Contrast that with on-premises software, which requires either being in the office to use or an extra layer of remote access software. That extra layer often introduces slow-downs, inefficiencies, and other challenges for users.
No one can predict the ultimate impact of the pandemic, but we have seen enough to understand that the world has changed. It seems likely that the pressures and changes discussed here will stick after the full return to work.
The imperative to reduce costs not only continues, it has become more urgent. Plus, all professionals have had to adapt to new ways of working. Fortunately, in-house counsel and legal operations professionals have great options to adapt to the demands. The right technology addresses both.