The Legal Benchmarking Survey has been monitoring trends and developments in legal departments since 2005. From strategy to implementation to monitoring success, the survey focuses on practical application: What works, what needs to be revised? In the current edition 2021/22, some well-known trends continue, but elsewhere a trend reversal seems to be emerging.
Main trends of the past 16 years up to today
The past 16 years were clearly marked by the growth of the legal department and the correlated cost-conscious insourcing strategy. While this strategy has paid off, the changes it incurred present a new set of challenges: increased cost pressures, an increasingly complex work environment, and the need to continually rethink and further develop their business model, which does not leave legal departments unaffected either. Finally, the global developments of the last 2 years, of which Covid-19 has been a major catalyst, have also left their mark.
All this has led to the need to find new ways to increase efficiency: Never before has the profession of the in-house lawyer been so strongly influenced by the rethinking of processes and the need for digitalization.
Make Legal lean and emphasize core matters
For the first time since 2005, no increase or stagnation in the number of corporate lawyers in relation to corporate turnover could be observed. On the contrary, the numbers have actually declined. Whether this is a temporary effect due to external factors such as Covid-19 remains to be seen. In any case, we believe that the era of increasing build-up has its best days behind it. With the increasing cost pressure and uncertainty that companies are facing, alternative and more efficient ways will have to be found to get everything done with a limited number of resources.
These changes will also mean that Legal will have to become more goal-oriented: The general attitude and expectation of many stakeholders that Legal is a jack-of-all-trades who, because of its many interfaces with different parts of the business, also takes on other roles such as project management and acts as a knowledge center, will have to be reviewed.
The legal department should set a good example and make its areas of responsibility clear: Stakeholders should also be given clear instructions, not only on what requests the department can handle, but also how these should be handed in. A streamlined process of intake and processing will not only improve cooperation and efficiency with the business, but also the quality, speed and stress level for the legal department team members will be clearly influenced in the right direction.
Professionalize legal operations to increase efficiency
But despite the observed reduction in the number of lawyers relative to firm turnover, another interesting observation can be made. Not every form of resourcing has lost out over the past two years: The number of firms that have appointed a legal operations team has increased, as has the relative share of team members in the legal operations team in relation to the entire legal department. This is not surprising. Where there are efficiency gains to be sought and alternative ways to achieve them, there is a need for structure and for a process owner who can drive them. A legal operations team is the ideal player for this.
Automate to reduce manual effort and free up capacity
Digitalization and legal tech have been a hot topic for several years now and, as a result, often appear as an umbrella term where each term loses its individual meaning. Yet here too, we see that investment and freed up budgets continue to rise. The most common reason for this is to optimize the reduction of resources with other means, and also to increase quality.
However, with these goals in mind, it is important to realize that the purchase and implementation of relevant tools only makes sense if the right structure and supporting processes are in place in the legal department. Consistent use and the presence of established practices are paramount to prevent the tools from falling into disuse. The complexity of these platforms is often underestimated when choosing a vendor. This affects the necessary willingness of employees to use the platform for their work, which can lead to the implementation of such platforms being unsuccessful.
Again, the support of legal operations officers can be the right solution to ensure this upfront and help you on the right path to the legal department of the future.
Increased focus on the value contribution of Legal
The indirect result of the aforementioned cost reductions and increased expectations has also led to more transparency being expected from legal departments. Until now, this was just about the only central function in the company that was spared KPI compulsion and the need to turn everything into quantifiable figures. While this upcoming trend may sometimes seem excessive in the eyes of Legal team members, there is also a clear benefit that can be captured for the legal department: Where Legal was often seen as a naysayer and obstructionist, this is the opportunity to clearly communicate their value contribution and publicize the ever-increasing workload and resulting efficiency gains.
The result is that the request to invest in additional resources can also be explained and justified more clearly when the efforts to increase efficiency and the associated benefits can already be communicated clearly and in plain language. Moreover, it is also the perfect opportunity to make sure that the legal department is on the right track to achieve the set goals and to actually realize its efficiency potential. If the goal is not fully achieved or not achieved at all, it will be possible to make adjustments.
For both large and small companies, a complete transformation of the legal department will be paramount to their future success. In the coming years, new core competences will be seen in the classic profession of the in-house lawyer; these will be increasingly complemented by newer players in the legal department, such as an increasing number of legal operations and legal tech officers. This new focus will not only lead to a different interaction within the legal department, it will also lead to a different relationship with clients: Away from a nontransparent support service and towards a client-focused service provider whose value contribution can be observed throughout the company.