After several years of hefty workloads and backlogged projects, in-house law departments appear to have carried do-more-with-less directives as far as they can. Recognizing the barrier to productivity and performance, CFOs are expanding corporate law department budgets to maintain momentum.
On average, 2022 budgets are forecasted to receive a modest 5% bump, which is just enough that CLOs and GCs still need to make calculated investments in their labor and outside spend. The question is: where should law departments begin?
From a variety of sources, there are a few clear ways of enhancing ROI on legal spend. Here are strategies law departments are employing to control their costs and maximize their value in 2022.
1.) Invest in the Right Technology
Mori Kabiri, CEO of InfiniGlobe and legal IT expert, had this to say in a recent article: “Historically, lawyers have been resistant to embrace new technologies and innovation, which makes sense given the law is based on precedent. And sticking to the tried and true might have worked in the past two recessions, but I have also watched over the past 20 years as others tried the new and grew.”
Gartner shows the needle is already moving in the direction of expanded IT across in-house law departments. Their data shows legal technology spend grew 1.5% between 2017 and 2020 and, with the onset of the pandemic, is set to increase threefold by 2025. Through a combination of overdue modernization and a desire to reduce dependence upon outside counsel, the right technologies have the potential to increase the productivity of in-house attorneys.
Additionally, the National Law Review suggests prioritizing certain innovations. Automation tools can streamline workflows by enabling attorneys to minimize or even eliminate the time and effort spent on non-legal tasks (e.g., communications or billing). AI platforms have the potential to analyze data points in everything from past cases on eDiscovery platforms to relevant patents within massive IP portfolios, reducing the time and resources expended to track down the information necessary.
2.) Dig Deep into Historical Legal Spend
The last two years have upended traditional spending habits. Whether it’s a reduction in travel costs, team events, and real estate due to the pandemic or a change in tools due to recent digital transformations, expenses are a moving target. Since the return to pre-pandemic conditions is unlikely, corporate law departments need to integrate these new realities into spending expectations.
Which expenses still matter?
There are other resources to guide your decisions. The ACC’s 2021 Law Department Management Benchmarking Report highlighted specific technology areas with the greatest allocated spend. The top three are as follows:
- Contract Management (42.0%)
- Compliance (33.3%)
- Legal Research Services (28.5%)
Wider adoption of these technologies indicates that early adopters have already pioneered use cases and demonstrated proof of their effectiveness.
Additionally, as the trend in remote law department management spreads across the industry, there is an opportunity to maximize your spend by investing in laptop hardware, VPNs, and encryption capabilities to save money from any non-compliance issues and mitigate costly data breaches.
3.) Spending on Non-Legal Talent
In an interview with Bloomberg Law, John Knox of EY indicated many corporate law departments will shift away from traditional hiring. He said, “If you were looking to hire an extra four or five heads, could you think about those extra four or five heads in a slightly different way? Instead of hiring five lawyers, companies could hire two and use the other positions for a project manager, legal technologist and process engineer.”
The impulse to solve every challenge by hiring an attorney may be unnecessary You can reallocate your hiring budget for an equally essential, but often less pricey resource.
4.) Work with Temporary Attorneys
Sometimes, you can’t avoid hiring attorneys to overcome a particular challenge. Document reviews, contract negotiations, and investigations are all better performed by an experienced attorney. However, you might not have the budget or the ongoing workload for a given practice area to justify a full-time hire. Rather than going without vital expertise, many organizations are seeing this as an opportunity to engage temporary attorneys.
The right temporary legal staffing firm not only can connect you with attorneys who are willing to work on a short-term or temporary basis but experienced attorneys with in-demand practice area expertise. These days, there is a wide range of attorneys who are drawn to these types of provisional positions. Some do so because they crave a work-life balance they were unable to find within law firms or previous in-house legal positions. Others want to break up their retirement with opportunities to keep their minds sharp and make an impact.
Regardless of why they choose to work as temporary attorneys, you have an opportunity to maximize your departmental budget as well as maintain productivity, dwindle down your backlog, and diminish the lawyer stress level within your organization. This can make ROI extend far beyond your initial decision, helping you weather any unpredictable challenge the world throws at your department.
Want to determine if your next hire will help elicit the full ROI of your legal spend this year? Review our budget calculator to determine if there is an opportunity to enhance your finances.