Companies frequently experience cost-cutting pressures in uncertain economic times, which can lead to hiring freezes, decreased investment, and a reversal of expansion or growth plans.
It should come as no surprise that this pressure is applied to the entire business infrastructure, and many corporate law departments are experiencing strain like never before due to demands to reduce expenses and carefully consider all expenditures. So how can legal departments continue to manage a growing volume of sophisticated legal and compliance work while doing more with less?
In fact, even more than protecting the business, which is arguably the primary goal of an organization’s legal function, conducting operations as efficiently as possible was cited by half of the senior in-house counsel surveyed in the Thomson Reuters Institute’s 2022 State of Corporate Law Departments Report.
Many in-house lawyers appear to place a high priority on efficiency. They identified cost constraints and achieving more with less as their top efficiency problems in the same poll. Other difficulties were also mentioned, including managing the company’s technological and digitalization projects, enhancing operational effectiveness, and optimizing work processes.
But what concrete actions can corporate law departments take to enable them to work more efficiently? Company chief legal officers can consider their overall legal spending in a number of ways, including the following:
- Switching to cheaper legal service providers
This one could appear simple: Look for cheaper legal services. Corporate law departments that deal with a lot of litigation, personnel concerns, intellectual property (IP) matters, or merger and acquisition (M&A) scenarios may choose to hire outside law firms from cities outside than New York City, Los Angeles, or London, which are known as legal hotspots. Instead, a large portion of the work can be completed by less expensive regional legal firms in less expensive regions of the United States, such as Kansas City, MO, Nashville, TN, or Denver, without a major reduction in the quality of the job.
These smaller regional powerhouses frequently have the ability to match (or come very near to) the litigation, M&A, employment, or IP knowledge offered by big metropolis firms at a significantly lower price. The corporate law department will likely have more freedom to seek price caps for bigger projects or find other alternative fee arrangements if specific work, like M&A or due diligence, is sent to a smaller regional firm rather than a bigger, less flexible law firm.
- Outsourcing legal expertise
Utilize the increase in remote work to access the talent pool that exists around the world.
This tactic might entail hiring legal talent from other nations, like India, where workers or independent contractors can handle more standard legal work, like reviewing contracts and non-disclosure agreements (NDAs), performing due diligence on M&A deals, or performing other high-volume, low-risk tasks.
The advantages are doubled by shifting this task to legal talent from offshore: Your law department is not only able to accomplish this work more affordably, but it also frees up your higher-paid legal staff to take on more beneficial and profitable work for the company. In fact, if your organization already has an offshore location, expanding the legal skills there can allow your team to help the business by providing more “real-time” counsel to employees in other time zones and global offices.
- Utilizing flexible new and existing talent
To make sure that all resources are being used as effectively as possible, many law department directors are reassessing their talent needs. Hire more senior candidates who can use their legal expertise outside of their area of specialization, making them more valuable as utility players who can assist the department in meeting all of its needs.
Many departments are realizing the benefit of introducing flexibility to the department and giving legal teams the depth to respond quickly to changing circumstances by hiring more multifaceted attorneys who can advise the business on a variety of legal matters.
This tactic can extend beyond just hiring new employees, as many department heads encourage their current attorneys to work outside of their primary practice areas to satisfy new directives or demands from corporate management or other divisions of the business.
- Using funds from other corporate units’ budgets
Corporate law departments shouldn’t always foot the bill for all collaborative work done when working with other business divisions within the organization, such as the tax department, human resources, information technology, or finance.
In fact, when teams from other business units ask the law department to take on a significant outside project or to provide legal resources, ask other departments to cover the entire or a portion of the cost. Teams may also split the expense of hired workers who must do tasks for two or more teams, such as multinational company secretaries and administrators of equity.
- Appointing a legal operations expert to improve the use of technology
One of the first and most significant hires made by many GCs is a legal operation specialist. These individuals are given the responsibility for increasing departmental productivity, providing metrics to measure productivity, and enabling visibility into contract cycles to optimize workflow.
Many law departments presently use a variety of legal technology, as the 2022 State of Corporate Law Departments Report demonstrated, and that number has increased over the past few years. For instance, more than half of departments now report using legal research and contract management technologies in their daily operations, and nearly two-thirds of departments claim they utilize e-signature technology on a regular basis.
Legal operations specialists can significantly increase value by maximizing the use of technology and offering measurements that can track performance and advancement. This then enables leaders of the legal department to communicate in a language of data and numbers that is understood by other business units, which can help them show how well the legal team is performing to other business units and the board of directors and assist chief legal officers in arguing for more resources when necessary.
- Maintaining progress while considering the bottom line
There are additional ways for corporate law departments to comply with the requirement to perform more with less than these five measures. Efficiency remains a top priority for many in-house law departments, thus pursuing necessary technological projects as well as associated issues like bettering talent and resourcing strategies will be added benefits for departments trying to balance their needs with their available resources.