Legal Operations

When It Comes To Legal Operations, Survey Says…

With advances in technology, much deeper insight into operational and financial performance has been gained.

By Mike Quartararo on December 18, 2018 4:28 pm

I spent the better part of my weekend looking at industry reports and articles. I was looking for an article that I know I kept a copy of at some point. I never found it. What I did find is a potential topic for this week’s legal operations column.

I like surveys. Any survey I can get my hands on, I read it. I think statistics are one of those things that truly impact people. True, I was terrible in math and half the time I don’t understand what statisticians are talking about. It is equally not always clear how surveyors derive their numbers. But one thing is clear: Without these numbers, important aspects of our lives probably would not function properly (think: economy). But I digress.

In the legal industry, numbers are driving business decisions. We call them metrics or KPIs or analytics, but they’re just numbers; just statistics. And some of them have been around forever. More recently, and with advances in technology, we’ve been able gain much deeper insight into operational and financial performance using numbers.

And this leads me, believe it or not, to surveys. They’re generally easy to create, even easier to answer, and they provide rudimentary statistics that, assuming the stuff is not just made up, can actually be informative and useful.

Among the industry reports I looked at this weekend was the 2018 Chief Legal Officer Survey by Altman Weil. The survey consists of mostly multiple-choice questions posed to about 1200 legal department leaders. This year’s results are based on the answers provided by 279 respondents.

I read the CLO survey every year. This time, by the time I looked up at the clock and realized how much time had passed since I started reading this year’s report, it occurred to me that there’s a legal operations column in this.  It dawned on me, too, that the CLO survey is like 70 pages long. Given that most CLOs, according to the survey, have more important things to do, I thought it may be helpful to summarize a few highlights from the survey for anyone who do not have the time to read it.

So, here goes:

  • One conversation I have had more than once in the past year is about the trend toward more legal work being performed in-house. It’s a little surprising, then, that in the next 12 months, the majority of legal departments are not expecting to overwhelmingly add a lot of personnel. Survey respondents indicated that less than half, roughly 42 percent, expect to add in-house lawyers, 32 percent may add paralegals, and just 18 percent may increase support staff.
  • In a related question, of the 42 percent of respondents who said they were adding in-house lawyers, the top three reasons for doing so were to handle an increase in workload, to fill open roles, and to save money on outside counsel.
  • It has always been interesting to me to see who is helping the GCs of corporate America run their legal departments. After all, the GC is generally accountable to the business, advises executives and board members, and generally may not have time to run a department. It was nice to see that the CLO survey shows fully 62 percent of legal department administrators are non-JDs. Only 19.6 percent are JDs and about 20 percent have MBA degrees or other professional degrees (Altman Weil suggests this latter category is on the rise).
  • Anyone curious about hiring trends in legal departments might be interested to learn that the vast majority (about 80 percent) of legal department administrators or legal operations managers are hired from within the organization, although a handful (about 15 percent) come from legal departments in other companies. Just a few come from law firms.
  • Also interesting is that 67 percent of CLOs cite to greater use of technology as the biggest driver of efficiency within the legal department and 73 percent of CLOs cite to the hiring of an administrator or operations manager as the most significant factor in the efficient delivery of legal services.
  • Cost controls are a big factor in running a corporate legal department. After all, the expense of a legal department generally goes to the bottom line. So, what is the most commonly used tool for controlling cost? About 62 percent of CLOs say they obtain price reductions from outside counsel. Second most common? About 60 percent say they are improving efficiency internally. Interestingly, the use of fixed fee agreements as a means for controlling cost appears to have dropped off just slightly.
  • Notwithstanding the never-ending railing against high law firm prices, the number one reason the CLO’s shifted work from one firm to another? Client services. Nearly 52 percent of CLOs said this was the reason they moved legal work to another firm. Number two reason? Legal expertise (40 percent).
  • Other little tidbits:
    • About 49.5 percent of CLOs say they increased their overall budgets in 2018, up slightly from 2017.
    • Roughly 42 percent of CLOs say they increased their outside counsel spend in 2018, up from about 32 percent in 2017.
    • Budgets for non-law firm vendors appears to have remained relatively flat in 2018.

There’s a ton of other information in the CLO survey and if you have time you should read it. It’s free and available here. It helps, too, to have the last few years of CLO surveys handy so it’s easy to compare results and find trends.

Merry Christmas, everyone.

Mike Quartararo is the managing director of eDPM Advisory Services, a consulting firm providing e-discovery, project management and legal technology advisory and training services to the legal industry. He is also the author of the 2016 book Project Management in Electronic Discovery. Mike has many years of experience delivering e-discovery, project management, and legal technology solutions to law firms and Fortune 500 corporations across the globe and is widely considered an expert on project management, e-discovery and legal matter management. You can reach him via email at [email protected]. Follow him on twitter @edpmadvisory.