The 2016 HBR Consulting survey found that worldwide corporate law department spending increased a modest one percent from the prior year. Behind this seemingly minor change is a significant shift in law department strategy. In addition to enforcing spending caps, law departments are embracing creative ways to optimize internal resources and ensure that the right people are handling the right work in the most cost efficient manner possible.
Law firm billing rates increased steadily, giving corporate law departments more reason to curtail outside counsel spend. Outside legal costs accounted for 52 percent of law departments’ total spend, down from 55 percent reported in the 2015 survey. About two-thirds of law department respondents report using more consistent planning and budgeting, as well as tougher oversight of outside counsel billing guidelines, to rein in spending.
Nearly half of survey participants cite ramping up technology use as an important way to cope with swelling demand while maintaining internal efficiency. A comparable percentage are placing a priority on re-engineering work processes and automating routine activities, in order to optimize use of staff time and resources.
Law department median internal spend on systems and technology stands at $204,000, up three percent from last year’s survey.
Legal spend analytics is another area poised for technology investment in 2017, as departments look for new ways to harness their internal data for greater transparency and to support key management decisions in such areas as organization and budgeting.