These are not easy times for legal departments. They play a vital role to play in a company's organisation, as they provide strategic guidance to the Board while managing a wide range of legal tasks, such as legal entities monitoring, contract management and legal risk management. And today, in a fast-paced business landscape, legal departments also face increasing demands to navigate complex legal frameworks, and pretty much stagnant, if not decreasing, budgets.
To meet these challenges while maintaining cost-effectiveness, legal departments need to reassess their sourcing strategies.
And that is the subject of the webinar: The changing balance of power between law departments and law firms, where Alan Ragueneau, Managing Director at Dentons In-House Solutions and Grégoire Miot, Global Product Management & Business Enablement Director at Wolters Kluwer discuss how important it is for legal teams to make informed decisions when it comes to outsourcing strategy decisions.
They present a broad overview of the most recent studies on the legal services’ sourcing strategies, the underlying factors behind the latest observed trends, the importance of KPIs when it comes to make strategic decisions and how technology is currently changing the balance of power between law departments and law firms. Here are 3 takeaways from the discussion before watching the recording:
An insourcing trend
Since the financial crisis of 2008, legal departments have been involved in the cost optimisation processes adopted by companies. As a result, they need to keep a close eye on their budgets and annual expenses.
Today, the average cost of a lawyer has outpaced inflation by 2x. As a result, legal departments have clearly reshaped their strategy, and are increasingly turning to the insourcing of legal expertise. In fact, 78% of legal departments believe insourcing offers opportunities for cost savings.
Higher standards when choosing a law firm
84% of interviewed legal departments say they became more selective about the law firm with which they do business. This can be explained by a heightened sensitivity to pricing, in line with the cost-efficiency thinking that legal departments have been adopting in recent years. But it's also largely due to the rise of technology, which has convinced many General counsels of its crucial importance. Corporate lawyers, sometimes themselves equipped with cutting-edge technology to handle their matters, are demanding that their outside counsel make the most of technology to maximise their efficiency and productivity.
32% of legal departments say they are very likely to switch their law firm if the firm did not demonstrate efficiency and productivity, or did not equip staff with the right tools to perform work.
Data’s crucial role
We are indeed seeing a trend towards insourcing on the part of legal departments. They will be leaning more and more towards digital solutions to maximise the efficiency of their teams and enable lawyers to handle a greater volume of cases without increasing their workload.
Adopting a legal solution for your legal department is a great project, but when it comes to implementing your strategy, nothing is more important than data.
“Structured data is key”, explains Alan. To restructure the legal function, you need to be able to answer all the questions that arise, such as How many contracts does my department manage? How many “complex” contracts? How many "routine" contracts?, and many others. These questions can only be answered if your data is structured, and the answers will allow you to find the right balance between insourcing and outsourcing your activities, and help you in shaping the digital strategy of your department.
Are you wondering whether you're ready to restructure the legal function in your company? Do you want to learn more about how to optimise in-sourcing and outsourcing decisions for your legal department? Watch the recording of the webinar.
