New data from Thomson Reuters The “2022 Study of Legal Department Operations (LDO)” shows that the top two priorities for in-house teams as we face a recession are: “using technology to simplify workflows and manual processes” and “controlling the costs of external advisers’.
The two elements combined (see table below) are a transformative mix and make a lot of sense. Although, perhaps surprisingly, interest in using those offered by ALSP has been low – which for this site seems like something of a paradox. Here are some thoughts:
- While in-house teams will undoubtedly continue to outsource the most high-risk and business-critical work to law firms (and they’d be foolish not to…), when it comes to process work, this area can be handled in other ways .
- This study shows that in-house teams are likely to bring more of this work in-house, which is intended to be more cost-effective (and often is).
- But if you do, your team will get bogged downand as seen in Axiom’s report in AL yesterday ( see here ), too much process work leads to burnout and disaffected advisors, e.g. 47% of in-house lawyers are already burnt out or very stressed. Put more process work on their desks and they might break.
- You need to find a better way to handle this process so it doesn’t overwhelm your internal team. One positive is that now it seems that internal departments are looking to use more technology to help, and no doubt they are thinking about: CLM and other contract management systems, document automation in general, as well as better automation of processes, and also independent – service facilities. This should help take the edge off the process work – if implemented well….(but that’s another story….)
- But it would also make sense to do two other things: A) send more of the process development to Legal Managed Services provided by ALSPs (or those of law firms) that are specifically designed for such work and can handle it they do more economically and are experts in this field; and also B) rely more on flexible lawyers to handle the increase in work without having to hire new staff if you face cost constraints.
- Merely moving the same types of work done in the same way from one location to another will not solve the systemic challenges customers face. They need to get to the root causes, and with the interest in technology, there is some good news here. But perhaps more can be done to rethink the “means of production” and seek lasting positive change.
Each time, the overall focus on legal technology is very welcome, even if the lack of interest in ALSP seems counterintuitive.
But the customer is always right…right? So they must have good reasons for this lack of appetite for ALSP. Maybe they don’t deliver what companies want or don’t live up to expectations, more like an oversold legal tech startup? It’s hard to know and we need more research here to understand this lack of love for ALSP.
PS The level of interest in not using billable hours…….well, it is a high priority for only 17% – another seemingly logical thing to change that would help internal teams, but which stubbornly refuses to budge. Although perhaps we should be thankful for those lucky few in the 17% group.
The full report can be found here.
Methodology: The data in this year’s LDO Index survey consists of real-world analyzes of legal costs collected by Thomson Reuters’ Legal Tracker and sourced from more than 1,500 corporate law departments. This data is supplemented by a Thomson Reuters survey conducted in August and September 2022, to which 107 legal departments responded.
Simplify Manual Processes + Control Law Firm Spending: The Inhouse Priorities