In the coming year, corporate law departments across the country are planning to increase alignment with other teams within their organizations, use more technology, and continue to find ways to control costs. These priorities are set against the backdrop of an increasingly complex business and regulatory environment and a time of belt tightening in many industries.
To what degree in-house legal professionals will succeed depends on their ability to overcome obstacles to effective cooperation – chief among them lack of bandwidth and budget.
The findings come from the latest report from Everlaw and the Association of Corporate Counsel. The new report, The State of Collaboration in Corporate Legal Departments, surveys nearly 400 CLOs, GCs, and legal ops professionals about the internal and external collaboration trends and challenges shaping their work. It also looks at the ways that technology enables their goals.
In-House Legal Teams Feel Valued Internally, but Are Still Viewed as Roadblocks by Peers
When it comes to collaboration with internal stakeholders, the vast majority of respondents (80 percent) say they feel valued by their organization, but in-house legal professionals still don’t get a seat at the executive table as often as they should.
Nearly half of respondents (47 percent) say they’re brought into important initiatives only after most strategic decisions have been made. This hampers their ability to deliver high-impact advice when it matters most.
Fairly or not, more than half say they’re perceived as a roadblock that slows projects down (58 percent) and nearly a half say the legal team is seen as too risk averse (41 percent).
Not surprisingly, the number one priority for the coming year for the majority of respondents (70 percent) is better alignment with other business departments.
Stronger collaboration with colleagues in operations, sales, finance, IT, and others leads to a deeper understanding of overall company objectives and challenges. And it helps put in-house teams in a more proactive position to deliver legal advice that supports faster decision making.
Using More Technology Is Second Highest Priority, But Bandwidth and Lack of Resources Remain an Issue
Sixty-six percent of respondents say their second highest priority for the next 12 months is greater use of technology. A vast majority (80 percent) also say it’s crucial that the collaboration tools they use are integrated with the company’s for better collaboration across the organization.
However, challenges to better internal collaboration abound. Chief among them, according to 71 percent of respondents, is a lack of bandwidth to dedicate to process improvement. Insufficient resources are cited by nearly a half, while a third say they don’t have the technology to centralize information for better collaboration.
In-House Teams Continue to Drive Down Costs by Bringing Work In-House
Facing skyrocketing law firm rates and internal pressure to save money, corporate law departments are accelerating the trend to bring more work in-house – despite flat or reduced internal head counts.
The majority of respondents (66 percent) say their top cost-containment strategy is to move more work in-house, compared to 59 percent last year. The top reason is to lower total costs, cited by 82 percent. Contracts and litigation are some of the most common types of work that are being insourced.
Additionally, nearly 40 percent aim to shift work from big law firms to smaller firms that can provide similar or better value but at lower cost.
Beyond cost control, bringing work in-house comes with other benefits, including better cost predictability, cited by 51 percent of respondents.
Corporate Legal Teams Need More Cost Transparency From Law Firms
In-house legal counsel give their law firms high marks on responsiveness (76 percent satisfied) and strategic collaboration (70 percent satisfied).
However, progress needs to be made around open communications, especially when it comes to costs. Only 42 percent of in-house legal professionals say they’re happy with their outside counsels’ cost transparency and just 38 percent with cost predictability.
Better visibility into billing lets in-house legal teams to better align their expenses with the company’s business goals and prevent unpleasant surprises.
It’s been a punishing few years in business. Between continuing supply-chain woes, soaring inflation, and headcount reductions, in-house legal teams have had to do more with fewer resources – all while making sure they’re collaborating often and effectively within their organizations and with external partners. It’s no surprise that so much focus is on costs, whether that means handling more work internally, pushing for more transparency from their outside counsel, or rethinking what is outsourced to big firms when they charge higher rates.
Technology has traditionally been the best way to increase efficiency and to scale, yet for many corporate law departments, it remains a hurdle just to implement and use new tools. Despite a lack of bandwidth and budgets, many have put greater tech use on their wish list for the coming year.