Data from a Decade of the Annual Law Department Operations Survey: An Update for Today’s Troubling Times

Back in June 2019, I presented “The Annual Law Department Operations Survey: Decoding a Decade of Data to Map the LDO Journey” at LMA P3 – The Practice Innovation Conference. During that session, I outlined how the law department operations role has changed since the 2008 launch of the survey, which asks in-house legal operations professionals to provide insight into many critical success factors for effectively managed corporate law departments.By that time, the function had changed quite a bit, and these past few weeks have put us on a new course, so now is as good a time as any for an update and look forward into what changes may be expected from law department operations professionals in the times ahead.

Change is the key word. Based on our 2019 survey, 88% of respondents believe that corporate legal departments will be the primary change venue in the legal sector, up from only 61% when we first asked the question in 2014. We can expect the actions related to that feeling to gain momentum and law departments to face tightening budgets.

One likely impact is increased use of artificial intelligence and better technology overall. When we first asked this question in 2014, only 43% said that law firms are leveraging technology to deliver legal services more effectively and efficiently; that number is now up to 51%.

Law department operations professionals are also taking more control of their companies’ relationships with outside counsel.

• In 2008, only 4% directed or managed the selection of outside counsel for particular matters; today 36% do.
• In 2008, only 16% directed or managed the selection of outside counsel for panels; today 46% do.
• In 2008, only 36% directed or managed the negotiation of rates with outside counsel; today 43% do.

All these numbers should be expected to increase as the trend toward the professionalization of the purchasing of legal services accelerates through difficult times.

One topic that is guaranteed to be even hotter in the near future is alternative fee arrangements (AFAs): More than 75% of our respondents believe that work done under AFAs is more cost-effective than work done hourly. They do not have much faith in law firms, however, to deliver them. Only 25% believe that their law firms do a good job at suggesting AFAs that meet their needs.

What else do legal ops professionals think of their outside counsel? The good news: 59% believe that outside counsel generally make strong efforts to understand the problems they face as a law department. The bad news: Only a third believe their law firms are innovative. And that number has not been growing in recent years.

---

"59% believe that outside counsel generally make strong efforts to understand the problems they face as a law department."

---

Perhaps most importantly, most of the challenges that our respondents face are cost related and always have been. That is not expected to change. Even before the economic downturn, legal ops professionals were already expecting it to be more difficult to find funding and to document their own performance. The law firms that can help them on those fronts are likely to be the most successful in the short and long term.

Editor’s note: Brad Blickstein, Melissa Gyure, Keith Maziarek, Professor Bill Henderson, and Justin R. Ergler presented their session “The Annual Law Department Operations Survey: Decoding a Decade of Data to Map the LDO Journey” at LMA P3 – The Practice Innovation Conference in 2019. Access the session here to purchase and listen today.

LMA transformed its in-person P3 - The Practice Innovation Conference into P3 - The Virtual Experience to meet the time-sensitive needs of the business of law community. Join us for a series of online, interactive content taking place this June. Visit the P3 home page for the most up-to-date information.