As legal departments complete more work in-house rather than seeking assistance from outside counsel, more pressure is being placed on internal teams, extensive industry research has revealed.
The Thomson Reuters 2023 Legal Department Operations Index found that 43% of legal departments brought more work in-house last year to cut costs. This trend is expected to accelerate, with 69% of legal departments planning to bring more work in-house over the next 12 months.
However, these in-house legal teams are expecting to manage this increasing workload while their budgets remain flat or even decline.
This is presenting legal teams with a conundrum: how to do more work with fewer resources. Many in-house teams believe legal technology, particularly artificial intelligence (AI), can assist.
What technology tools are most popular for departments currently? Also, why are legal departments not investing more in technology?
Legal technology assists in managing increasing workloads
The vast majority of legal departments (72%) plan to prioritise the use of technology to simplify their workflows and manual processes. Legal technology can be highly effective in reducing the time spent on work by automating routine tasks.
This is particularly useful for legal departments; 70% reported an increase in their workload over the last year, while only 35% have increased headcount – and 14% even cut their lawyer headcount.
Legal departments are already using a variety of technology tools to aid in workload management, with the most popular including e-billing software, e-signature tools, legal hold software, and legal research tools. At present, law departments favour these tools over emerging technologies like AI-supported tech. However, over the next two years, departments are set to procure more advanced tech tools, which will greatly help them manage their workload.
Legal workflow automation tools, legal task management tools, and contract AI lead the software solutions departments plan to introduce within the next 24 months.
If their workload continues to increase, legal departments may need to consider investing more heavily in technology tools, including more advanced solutions, to better support their teams in managing their workload.
In-house teams’ budgets are flat or declining, but more want to invest in tech
Unfortunately, while legal teams are increasingly convinced of the effectiveness of technology to alleviate workflow pressures, many departments are not yet increasing their investment in technology. Only 32% of in-house legal departments’ technology budgets are increasing.
The majority of legal departments (57%) believe that technology/automation will form a significant part of their cost-control strategy. But in order for technology to play a role in controlling the rise in costs, departments need to make up-front investments – which some departments have been reluctant to fully commit to as of yet.
These in-house legal departments could be persuaded to invest in new technology if they can generate a higher return on investment. They can do this by successfully identifying how value can be derived from technology tools like e-billing software, legal research tools, and workflow automation. Benefits include controlling costs, improving workflow efficiencies, and assisting in the development of new products and services.
The departments that invest will reap the rewards, while those who wait will continue to struggle with their workload and cost inflation.
Why in-house teams are conflicted about return-to-office policies
The Thomson Reuters 2023 Legal Department Operations Index also found that 57% of legal departments operate under a flexible working policy. Many departments are seeking to balance the benefits of face-to-face interaction with the autonomy and flexibility of remote working.
Leaders of in-house legal teams are concerned that lawyers may leave their department for a higher-paying law firm. Flexible working is being used to entice workers to remain at in-house legal departments; 12% of departments surveyed offer fully remote work, while only 5% have requested staff to return to the office full-time.
However, the decision-making on flexible working arrangements lies mostly with the broader enterprise (54%) as opposed to legal departments themselves (42%).
Employers may need some time to decide what arrangements work and which do not. For now, questions of what a law department’s work environment should look like remain open.
If departments take the initiative and explore the full range of benefits that the latest technology can offer, they could greatly reduce the burden on their stretched teams. In-house colleagues would welcome the support and in-house leaders will appreciate technology’s positive impact on productivity.
Jas Sandhu Dade, Head of Corporates Europe, Thomson Reuters
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