Legal Department Operations Index shows focus on spending, technology, and management

Spending, technology & department management are the issues that are currently top of mind for many corporate legal departments, according to a new report.

Corporate legal departments are keenly focusing on three crucial areas of their operations — spending, technology, and department management — according to the just-released sixth edition of the Thomson Reuters Institute LDO Index.

The data for the Index is comprised of real-world legal spend analytics available from Thomson Reuters’ Legal Tracker that’s sourced from more than 1,500 corporate legal departments and a June 2021 Thomson Reuters survey to which 100 legal departments responded.

In the survey, a full 82% of legal departments identified themselves as proactive, optimized, or predictive in their approach to managing their legal spend in regard to outside counsel. Departments also showed the use of alternative fee arrangements in some capacity (usually up to 20% of overall legal work) continues at most companies.

Interestingly, companies were mixed on either increasing or decreasing legal department budgets and overall outside counsel spending, showing that many legal departments and their companies are still were dealing with some of the performance-impacting effects of the global pandemic year of 2020.

On the technology question, the survey showed the adoption of critical legal technology is expanding as departments look to enhanced technological solutions and digitalization to improve efficiency and lower department costs. More than half (52%) of the legal departments responding to the survey reported having increased their use of legal technology over the past year.

The report also identified nine key legal technologies tools or solutions that more than half of legal departments surveyed said they were utilizing. Impressively, especially given the disruption of the pandemic, this was up from six identified technologies in the 2018 LDO Index report.

Finally, one very positive development in this year’s report was legal departments’ overall movement on requiring diversity among their outside legal counsel. This edition of the report marks the first time that a majority of corporate legal departments said they are asking their outside law firms for their diversity information.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Thomson Reuters Institute is owned by Thomson Reuters and operates independently of Reuters News.

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Blythe Serna