3 Reasons Corporate Legal Departments Are Adopting New Technology in 2023

In-house legal departments, already pressed to accomplish more on limited budgets, are facing even greater belt-tightening as the threat of a recession looms. Staffing budgets are being flattened even as legal teams take on more work internally to reduce outside counsel costs. The faltering economy is already leading to hiring freezes and layoffs at many companies.

Adopting legal technology is one of the most obvious solutions. The right tools make a significant difference in a legal teams’ efficiency, productivity, ability to drive better business results, and ultimately job satisfaction. Gartner predicts legal tech spending by corporate law departments to increase threefold by 2025.

Among the reasons in-house departments are modernizing, three stand out.

1. Bringing More Litigation In-House Justifies Investment in Tools to Increase Team Capability

Outside counsel rates are increasing, the average time it takes to resolve litigation is on the rise, and in-house leaders are looking for ways to control ballooning costs. This goes double in a slowing economy.

The go-to strategy for many has been to handle more work internally. Nearly 60% of GCs, CLOs, and in-house legal professionals said they’re looking to move more litigation work in-house to contain costs, according to “The State of Corporate Litigation Today.” The industries making the biggest changes are energy (83%), healthcare (71%), and insurance (71%).

 

 

Moving legal work in-house is inherently a technological endeavor. Reducing costs by bringing work in-house, powered by technology, can have significant impacts on a company’s litigation posture.” – Chuck Kellner, Strategic Discovery Adviser, Everlaw

 

 

Urgency to Invest in Legal Tech is Growing

To manage ballooning workloads alongside strapped budgets, legal teams will need to invest in technology that simplifies and scales their work. With modern tools, teams can collect data more quickly and efficiently in-house. And there is better control over data security with fewer outside parties involved.

Interest in using new technologies in-house is growing alongside the pressures to do more with less. More than half of in-house decision makers (56%) expect their technology needs to increase in the coming year, according to the report.

These trends will impact hiring. Survey respondents cited the ability to adopt new technology as the top non-legal skill needed for success for the next generation of in-house legal professionals. In fact, tech savvy far outpaced expectations around ability to navigate complex ethical issues or demonstrating soft skills such as empathy.

 

Chart showing non-legal skills deemed most critical for in-house professionals

 

 

2. Cloud Tools Let Teams Scale Up and Down Without Adding Headcount

On-premises ediscovery solutions are rapidly sunsetting and the legal industry is speeding up its transition to the cloud. Adoption of cloud technology increased from 27% in 2021 to 43% in 2022 according to a survey of about 200 legal professionals across law firms, corporate law departments, and government. Meanwhile, use of on-prem, hosted solutions decreased from 56% to 38%.

And for good reason.

The choice between a cloud or on-prem tool significantly impacts an entire legal organization. Cloud-based solutions allow teams to take advantage of advanced tools in the ediscovery process, and develop greater workflow efficiency. Those who manage cloud technology in-house report better results than those who still use legacy solutions, particularly in the key areas of speed, handling novel data sources, creating efficient workflows, and efficiently leveraging staff.

On-prem users, by contrast, are more likely to experience the frustrations associated with outdated technologies that require manual workflows, strain small teams, and cause delays. They also are likely to pay extra for top capabilities at every step of the ediscovery process, including during data ingestion, document review, and productions.

Cloud Delivers Speed, Efficiency, and Smoother Collaboration to Corporate Legal

For their part, in-house legal professionals now consider cloud technology to be the norm, with 98% of participants in a survey gauging cloud ediscovery technology adoption rates saying it already is the current standard or will be in the next two years.

Corporate legal professionals are leveraging technology to streamline their internal processes, keep up with expanding data sources and volumes, and contain rising outside counsel costs.

With 29% of respondents managing their own cloud-based technology in-house, cloud ediscovery tools are now solidly within early majority adoption among corporate legal departments. Those already using modern cloud tools cite the ability to scale with the growth in data volume, speed, rapid innovation, and real-time collaboration across hybrid and remote teams as the top advantages.

 

Chart showing the main advantages of cloud-based ediscovery solutions

 

 

3. Tech Solutions Are the Fastest and Most Effective Way to Modernize In-House Processes

A little technology goes a long way. As a force multiplier, tech tools let teams get more work done in less time. Those who still use outdated or no technology are missing out on the efficiencies that come with modern tools.

Take for instance, legal holds, one of the most frequently performed in-house tasks. About half (51%) of participants in “The State of Corporate Litigation Today” report said they still use email to manage legal holds, and 35% use spreadsheets. Tracking custodians and sending reminders, like all manual tasks, is time consuming and subject to human error. Handling all the moving pieces in multiple tools leads to workflow inefficiencies, communication issues, and increased noncompliance risks.

It makes sense that many respondents said they’d like to use more technology, including:

  • Legal holds software technology (39%): Modern legal hold technology lets teams leave labor-intensive manual tracking of custodian notices behind, making the process faster, more efficient, and secure.
  • Data ingestion via API-driven connectors (32%): Cloud connector technology helps teams ingest data straight from a cloud source such as Zoom or Slack, driving efficiency at a time when remote work is generating exponential increases in data volumes.
  • Early case assessment tools (39%): ECA dramatically reduces the amount of data requiring outside review, helping teams work more efficiently and control overall costs.

 

Chart showing tools used for litigation workflows

Successfully Leveraging Discovery Technology Beyond Litigation Matters

For in-house teams, ediscovery tools simplify document search, review, and production in scenarios that don’t involve litigation.

More than half (53%) of participants in “The State of Corporate Litigation Today” said they use discovery technology sometimes, often, or always to manage regulatory requests and due diligence. Nearly half (49%) use discovery tools and workflows sometimes, often, or always to manage internal investigations, third-party subpoenas, and data breaches.

 

Chart show rate at which ediscovery tech is leveraged for adjacent processes

 

 

Turning Disruption into Opportunity

Today’s lawyers, legal ops and other in-house professionals cannot effectively handle their core duties with outdated technologies or manual processes. The way to deal with growing litigation, data types and volume, and other workloads is to make strategic long-term investments in new tools.

As law departments plan for 2023, it’s a good time to sit down with the company CIO and CFO and make the case for investing in the digital transformation of the legal function. It’s the surest way to greater efficiency and better outcomes.

 

Read “4 In-House Strategies for Taking Control of Investigations and Litigation” to learn more about how modern in-house teams manage internal investigations and other matters.

If your team is ready to get started with legal holds, ECA, cloud connectors, or other tools that help streamline processes and workflows, check out the Everlaw Corporate Essentials offering.