Chief Legal Officers Embrace Role as Change Agents
336 law department leaders respond to industry survey
Newtown Square, PA, November 8, 2016 – Now in its 17th year, Altman Weil’s 2016 Chief Legal Officer Survey continues to provide insights into the state of in-house law departments from the perspective of their leaders and chief lawyers. In 2016 the survey shows an incremental strengthening of trends that have been emerging since the recession.
“Chief Legal Officers are embracing the role of change agents, wielding their buying power, leveraging technology and process efficiency, and outsourcing to alternative providers, all to build a more effective and flexible legal function,” according to Altman Weil principal and survey co-author James Wilber.
Highlights from the 2016 survey include:
Internal Costs and Efficiency: 62% of law departments are controlling costs by improving the efficiency of internal procedures. Top efficiency initiatives are the greater use of technology tools, reported by 60% of departments, and restructuring internal resources, reported by 57% of departments.
Outside Counsel Costs: Outside counsel present a broad target for cost cutting. In the last 12 months 58% of law departments negotiated fee discounts; 48% asked for alternative fee arrangements; 40% reduced the total amount of work sent to law firms; and 36% shifted work to lower priced firms.
Analyzing Outside Counsel Spend: In assessing their departments’ effectiveness in analyzing data on outside counsel spending, CLOs give themselves a median rating of five on a zero to ten scale. When asked about law firm performance in this area, 73% of CLOs reported that none of their top law firms provide useful data analysis to the law department.
Insourcing Law Firm Work: 81% of law departments that plan to reduce their total outside counsel spend in the next 12 months will bring some or all of that work in-house to be done by their own lawyers. 43% will reassign the work to their in-house non-lawyer staff; and, 42% say that it’s work they no longer need to do.
Outsourcing to Non-Firm Vendors: 57% of law departments outsource some work to non-law firm vendors, up from 43% in 2012. The two types of work most likely to be outsourced are litigation discovery (including e-discovery) and document review.
Law Department Administrators: 33% of law departments participating in the survey have administrators to manage day-to-day operations, financial operations, department technology and personnel. In departments with over 50 lawyers, 78% of CLOs report employing administrators.
“The trend we’re watching with particular interest is the emergence of data analytics as a sophisticated tool to quantify and evaluate internal efficiency efforts, outside counsel spend and all the questions around value delivered and received,” says Rees Morrison, Altman Weil principal and survey co-author. “Most law departments are at the beginning of the learning curve in this important area, while, as far as we can tell, many law firms aren’t even in the game.”
The Chief Legal Officer Survey has been conducted and published annually by Altman Weil since 2000, most recently in September and October 2016. Three hundred thirty six responses were received for the 2016 survey, a full 20% of the 1,711 corporate law departments invited to participate. Survey topics include: law department staffing, spending, efficiency, cost control, relationships with outside counsel, and the Chief Legal Officer’s role in the organization. Demographic and budgetary data on responding law departments is also included in the survey report. The full survey is available to download at www.altmanweil.com/CLO2016.
About Altman Weil
Founded in 1970, Altman Weil, Inc. is dedicated exclusively to the legal profession. It provides management consulting services to law firms, law departments and legal vendors worldwide. The firm is independently owned by its professional consultants, who have backgrounds in law, industry, finance, marketing, administration and government. More information on Altman Weil can be found at www.altmanweil.com.
James S. Wilber
Principal, Altman Weil, Inc.