Through their interviews they found that the “most innovative are using a portfolio approach — combining outside counsel management, internal optimization, technology, and co-sourcing strategies.”
At Johnson Hana, this aligns closely with our own findings from conversations with clients and our first-hand experience with domestic and international clients.
Legal departments are under serious pressure to reduce costs
We see the pressure to reduce costs that legal departments are put under, and that the pressure is growing more intense as time goes on.
The legal market has changed rapidly in the last ten years, and even those companies who are successfully managing growth are finding that business leaders are being forced to make strategic decisions under a cloud of austerity.
While cost reduction targets vary greatly between companies, the survey found that the pressure was almost universal, with 88% of general counsel surveyed reporting that they are planning to reduce costs to some degree.
The quantum of those reductions is also startling. As noted in the report “the average cost savings being targeted by the largest organizations (those with more than $20 billion in annual revenue) is 18% over the next three years” while the target for smaller companies was also very high at 14%.
Insourcing comes at a cost
The big push to reduce costs is encouraging a trend of insourcing, and many legal departments are bringing some of the tasks they used to hand out to law firms back in-house as a way of reducing spend. However that, in turn, is leading to pressures caused by the corresponding higher workload.
Respondents to the survey said that they expected legal departments’ workloads to increase by 25%, but that headcount was only going to increase by 3%.
This could cause significant issues down the line as “76% of departments say they find it challenging to manage current workloads.” Such an increase in workloads will only exacerbate an already difficult problem.
Legal process work is a significant drag on productivity
It is not just the volume of work that is frustrating legal departments, but the type of it. The legal process work that sits below the higher-value advisory work is a significant drag on productivity.
As noted in the survey “law department leaders report that one out of every five in-house counsel hours is currently spent on low-value, repetitive or routine tasks, with 87% confirming that their department spends too much time on these tasks.”
To re-emphasize the point “47% report that increasing volumes of low-value work have adversely impacted employee morale. Given the importance of retaining and developing talent for law departments, such figures should be a major cause for concern.”
Increased spend on technology is required to lower overall costs
While lawyers and legal departments may have been perceived previously as somewhat technology hesitant, there is increasing appetite among general counsels for greater spending on legal technologies.
The report recorded that “fifty-nine percent of General Counsel believe technology offers significant or very significant potential for cost savings”, but some hesitance did remain.
Principally, this hesitance is caused by the lack of expertise in-house to select or deploy the right technologies, with legal departments reporting that “too much time is spent selecting technology, implementation is too time consuming and their lawyers don’t fully utilize implemented technologies.”
However, overall, the potential benefits of technology are understood, and desired.
…and use that Legal Tech to manage risk more effectively
This isn’t just about using technology to lower costs, this is also about using technology to achieve better results. And risk management is a key area that can be improved through greater use of technology.
As is noted in the report “responses from law department and business leaders also suggest gaps in process management and underuse of technology are limiting organizations’ visibility into risk.”
Going further, 65% of general counsels surveyed reported that “they do not have all the data and technology they need to effectively respond to a data breach, giving rise to risks related to compliance and data privacy.”
So, what’s the answer?
At Johnson Hana, the insights revealed in the survey are the stories we hear over and over again.
We understand the pressure legal departments are under to cut costs. We understand the weight of the burden of legal process work. And we understand the importance, as all of us in the legal profession do, of managing and reducing risk.
The good news is that there is a solution.
The problem is that many legal departments face see only two choices: either outsource the work to law firms, or bring it back in-house. This presents the problem as a zero-sum game between cost reduction and overwhelmed legal departments. This is a false dichotomy.
There is an alternative, a third choice, and for our clients at least, it’s one that they wished they had considered sooner: using an Alternative Legal Solution provider.
What is an Alternative Legal Solution?
Alternative Legal Solution is the umbrella term for a range of services that are offered by non-law firm companies.
At Johnson Hana, we provide Alternative Legal Solutions through two key service lines:
On-Demand Lawyers – to fulfil a temporary requirement for a qualified lawyer in a specialist area (such as for the duration of a project, or to cover maternity leave).
Legal Process Outsourcing – whereby a specific legal process is carved out and outsourced to us (Data Subject Access Requests, complaints procedures, discovery for large-scale litigation, etc.)
We’re not a law firm, and we don’t purport to be. We’re structured specifically to tackle legal process work, which is inherently different from legal advice, and which means we can benefit client in three key ways.
First, this means that we can apply legal technologies and a range of project management methodologies to ensure work is done efficiently, consistently, and to the highest possible quality standard.
Secondly, we can manage the work for a fraction of the cost of traditional law firms. The cost of our services are typically over 50% lower than those of traditional law firms.
Lastly, because we can itemise and closely manage our projects and processes, we can provide total clarity and transparency on billing. This means our costs can be easily forecast, and that every penny in the invoice is accounted for.
What do we do next?
If, like the 76% of respondents to the survey, you are finding it “challenging to manage current workloads”, your next step should be to contact us.
We can then discuss your precise circumstances and let you know exactly how we can help. Depending on your requirements, we will be able to provide you with a detailed breakdown of the services we can offer, including clarity on costs. The salient point, it is worth re-emphasizing, is that general counsels and their legal departments are not stuck between a rock and a hard place. Their choices are not limited to expensive outsourcing or overwhelming insourcing. An Alternative Legal Solutions Provider could be just the alternative they need.