Legal Departments and Digital Transformation

Key Findings from the Legisway Benchmark 2024

Introduction

Now in its second year, Wolters Kluwer has launched The Legisway Benchmark for Legal Departments, which offers a comprehensive overview of the status of technology in legal teams across Europe. The survey was translated into five languages and distributed across Europe. More than 350 in-house legal professionals participated in the survey, which examines maturity, process optimization, and digital transformation.

The results show that the pursuit of enhanced productivity and efficiency is the principal driver behind digital transformation. Legal technology providers play a crucial role by helping legal departments to structure their processes, collaborate with departments or external parties, and manage risks. Read on to discover key insights from this year’s report.

The State of legal tech

• Legal tech budget

The majority of legal departments (59%) have a defined budget for legal technology, with varying levels of investment.
The number of departments with a budget increased 8% compared to the 2023 benchmark.
Still, the largest group (30%) does not have a specific budget for legal technology, which could imply ad-hoc spending based on immediate needs and/or a lack of structured investment planning.

The budget breakdown also reveals that 11% have allocated over 50K€ for their tech needs.

• The Legal Ops function

The legal operations role has been on the rise in Europe. The survey found that 42% of organizations have a dedicated legal operations function. The presence of this function varies across countries, with 52% of UK organizations having a legal ops professional, compared to 38% in Germany and 35% in France. This suggests differing levels of maturity and focus on legal operations across various regions.

Setting KPIs

KPIs are not widely used in legal departments throughout Europe, since only 30% have established them, indicating a low level of maturity.
It's noteworthy that the use of KPIs in legal departments increases by nearly 10% when a legal operations function is present. This correlation suggests that the establishment of a legal ops function may enhance the department’s effectiveness.
Typically, legal departments that use KPIs focus on at least three key metrics. The majority (54%) track internal and external spending, followed by 50% who monitor the number of contracts handled, and 47% who track the number of managed litigations or claims.

The Benefits and Challenges of AI

The report further reveals that 40% of legal departments are currently utilizing some form of AI, while nearly 60% are not incorporating AI into their operations yet.
AI is primarily used for tasks involving large volumes of data and routine processes, where it significantly enhances efficiency and accuracy.
There is cautious adoption for more complex and critical tasks, suggesting a balanced approach.
The tasks AI assists with include administrative work and document analysis (50% each), report generation (36%), document comparison (33%), basic contract drafting, such as NDAs (31%), custom contract drafting (21%), and others (19%) which mostly involve AI’s support with translations. However, only 9% use AI for due diligence and a mere 6% for litigation.
As for the main challenges faced regarding the adoption of AI, lack of time and budget constraints rank as the top two.
Notably, among departments that have yet to adopt AI, ethical and reliability concerns rank higher as obstacles.

Conclusion

Digital transformation plays a crucial role in enhancing the efficiency of legal departments.
The adoption and integration of technology, such as AI and legal management software, can streamline processes, increase productivity, and improve day-to-day operations. However, setting a specific budget and developing a plan are crucial to overcoming obstacles to technology adoption.
A potential solution to this could be the implementation of legal management software, such as Legisway.
This tool can assist in setting and tracking KPIs, provide AI capabilities for tasks involving large volumes of data and routine processes, and ultimately demonstrate the department's value to the business. As the digital landscape continues to evolve, it's crucial for legal departments to embrace technology and digital tools to stay competitive and efficient.