To combat a growing volume of work, corporate legal departments are employing new cost control measures and more legal operations personnel, according to the Thomson Reuters Legal Tracker™ LDO Index.
This inaugural edition of the Legal Tracker LDO Index, based on anonymized data from more than 1,000 legal departments representing more than $71 billion in legal spend, begins a series of semi-annual reports that highlight qualitative and quantitative insights into the operations of legal departments.
The Index report was released today at VANTAGE Orlando, where more than 900 customers gathered for the annual Thomson Reuters’ Legal Tracker and Elite users’ conference.
According to the Index report — which can be downloaded for free below — almost two-thirds (62%) of legal departments report an increase in the number of legal matters they’re working on over the past six months. To handle this increased workload, legal departments are relying on their in-house resources, as well as expanding their use of outside counsel, technology and legal operations personnel.
Interestingly, increasing workloads were not necessarily resulting in higher staff levels. While 52% of legal departments said the percentage of work handled in-house in the last six months has grown, only 28% hired more in-house staff during the same time period.
Outside legal counsel, however, has seen the benefit. Nearly half of legal departments (45%) increased outside counsel spending in the last six months, while only 33% reported a decrease. On average, legal departments engaged 1.6 law firms per $1 million dollars in legal spend.
Using Cost Control Measures
The report separately surveyed 161 legal departments on their use of cost controls, with the following being ranked the most effective:
- Seeking auto-reduction of invoice expenses;
- Requiring law firm matter budgets;
- Setting a fixed or flat fee on matters; and
- Obtaining a volume discount.
In addition, the Index showed that legal departments are increasingly turning to legal operations professionals and technology to help improve efficiency. More than half (51%) of legal departments now have dedicated legal operations staff. In addition, 13% of legal departments increased legal operations staff in the last six months, while only 6% decreased staff.
Also, 18% of legal departments increased their spending on technology, while 12% spent less.