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Corporate law departments strengthen ties with outside law firms

A new report on corporate law departments shows increasing investments in technology solutions, an expected increase in legal spend, and strengthening partnerships between corporate law departments and their external law firms.

Thomson Reuters released 2022 State of Corporate Law Departments Report on March 22.

The pandemic impacted all aspects of business including corporate law departments globally, which have been on the frontlines of protecting businesses during this unprecedented time. This year’s report provides key insights to aid corporate law departments and the law firms supporting them with world-class business intelligence, including benchmarks on legal spend, how to optimize for the future, and innovative ways law departments can stay a step ahead.

“The impact of the pandemic and uncertainty propelled corporate legal departments to drive efficiency as a necessity,” said Sunil Pandita, president of Corporates, Thomson Reuters. “Whether it be from a talent gap, a do more with less mentality, and/or the need to focus on more strategic work, the investment in digital solutions is helping corporate legal departments drive the next level of efficiency and effectiveness—now more than ever.”

The report finds that the less tech-savvy legal departments were at a much higher risk for failure. Overall, however, technology adoption among corporate law departments is on the rise. The top three legal technologies being utilized are: e-signature tools (with 63.2% of respondents saying they use this tool), legal research (57.6%), and contract management (55%). The legal technology used the least is legal project management (30%).

Additional key findings from the 2022 State of Corporate Law Departments report include:

  • 43% of those surveyed expect their total legal spend to increase in the coming 12 months, as opposed to just 21% anticipating reduced spend. This is the strongest indication of a significant upturn in legal expenditure tracked in the last decade.
  • 82% of legal departments rate themselves as proactive or better on spend management
  • Alternative Fee Arrangements (AFAs) and fixed fees are only about 20% to 25% of billings, representing a slight decline since 2010
  • 90% of departments now use metrics to track their work; however, metrics could be more sophisticated
  • Spend is the #1 area for metrics, followed closely by efficiency and quality
  • Metrics are still largely focused on items easy to measure — money, perceived satisfaction, time taken to complete a matter
  • Metrics mostly focused on legal department internal procedures and not on larger business objectives

The report also presented the need for strengthening the relationship or partnering between corporate law departments and outside law firms. Specifically, such partnering should concentrate on pricing, project scope, and management. The Stellar Performance research panel cited “significant changes in scope” in approximately 30% of work matters, reflecting a need for better collaboration.

“Corporate law department leaders continue to navigate their organizations through a global pandemic and increased global uncertainty and market disruptions,” said Hillary McNally, general manager, Corporates, Thomson Reuters. “The relationship between the in-house team and the outside counsel remains important, with three themes rising to the surface for better partnership—pricing, scoping and project management.”

The report was compiled by looking at benchmarking data and anecdotal interviews through three key data sources: Thomson Reuters Sharplegal; the Stellar Performance research panels; and the Thomson Reuters Legal Department Operations Index.










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