In a recent report titled "2023 Legal Department Operations Index" by Thomson Reuters, the struggle faced by corporate law departments in adopting legal technology is pronounced in the results. Despite 72% of in-house legal department operations professionals prioritizing the use of technology to simplify workflow, only 32% reported an increase in their legal technology budget. Furthermore, 90% of departments reported slow to moderate progress in adopting new technology, with 78% considering cost control a high priority.
The report sheds light on the technology conundrum faced by legal departments: how to leverage modern legal tech without additional budget. The report also found that 53% of law departments increased their use of legal technology in the past year, mostly without increasing their budget. This increased use of technology has resulted in higher productivity and output from attorneys, despite flat to declining budgets.
One way legal departments are improving operations through technology is by controlling outside legal spend. With law firms requesting worked rate increases "approaching historic highs," clients are shifting work from the Am Law 100 to midsize firms to realize net cost savings. Modern spend management systems provide visibility into rates across firms and regions, allowing legal departments to make informed decisions.
Another way legal departments are leveraging technology is by investing in e-billing and matter and spend management tools. A Forrester Total Economic Impact report on Thomson Reuters Legal Tracker found that the system paid for itself in six months, largely due to savings in outside counsel rate increases.
Despite some progress, the report notes that few law departments are making large-scale advances in technology adoption each year. Legal department leaders, comfortable with their existing systems, are often reluctant to risk breaking their systems by adopting new technology. Additionally, the close working relationship between law departments and other areas of the business can make large-scale changes to law department systems a cross-functional challenge.
To solve the technology conundrum, legal operations professionals are turning to metrics to support their case for technology adoption. Metrics related to cost efficiency, law department effectiveness, business enablement, and protection can be used to influence law department leaders and justify additional resources. Some metrics to consider include rate of staff turnover, volume of work automated, uptake of existing tech stack, percentage of matters with desired outcomes, and department net promoter score by internal clients.
While solving the technology conundrum won't be fast or simple, the 2023 Legal Department Operations Index provides valuable insights and industry practices that can help legal departments make data-driven decisions and improve their strategic planning and technology adoption.
