26 November 2018

The Changing Role of the Chief Legal Officer

Insights Resources

With just 22% of their time spent practicing law, Chief Legal Officers are part business advisor, part strategic planner and part departmental manager.

Not surprisingly, finding the time to properly balance these competing responsibilities can be incredibly challenging. However, with increasing pressure from the C-Suite to run the legal department like a business unit, the pressure shows no sign of abating.

To ensure effective and efficient management, CLOs are instituting key changes in their departments. According to the 2018 Altman Weil Chief Legal Officer Survey, these changes include:

  • Developing a more robust in-house capability
  • Restructuring department resources
  • Taking a more sophisticated approach to deciding which matters should be outsourced and which should be kept in-house
  • Committing to increased efficiency and cost control
  • Harnessing data for performance measurement

They’re also anticipating growing their teams.

42% of survey respondents are planning to increase the number of lawyers in their teams in 2019, while only 7.5% plan a decrease. According to Altman Weil, this is part of a long-term trend tracked since 2010, conceived mainly to cover an increased overall workload. Other factors include filling open positions, exploring new areas of expertise, managing new department responsibilities and geographical workplace expansion.

Interestingly, a third of the law departments planning new hires plan to do so in an effort to save money on outside counsel.

They’re also looking to legal operations professionals to help better manage the day-to-day. According to the survey, 39% of law departments surveyed in 2018 employ an administrator who is responsible for financial, technology and people management, along with outside counsel spend tracking and analysis.

Over three quarters of departments with 50 lawyers or more have a legal ops manager, while almost half of smaller departments (with 11 to 50 lawyers) do the same.

Legal spend is also up, with 53% of legal departments increasing  total spend in the period 2017 to 2018. The survey also found that 54% of departments increased their in-house budget in 2018 and for the first time, internal spend made up the largest portion of the total budget, with an average allocation of 48%.

However, external spend is also up, with 42% of legal departments increasing external spend from 2017 to 2018.

A similar percentage plan to increase this spend in 2019, with smaller departments most likely to do so.

However, along with an increase in spending, comes an increase in expectations. The survey noted that many CLOs are refining their law firm selection strategies and instituting cost control mechanisms. And firms are paying notice, with 62% of legal departments receiving a median discount of 10% this year.

Process improvements are also on the agenda, with 42% of departments redesigning workflow, 39% restructuring internal resources, and 27 and 25% respectively instituting knowledge and project management programs and methods.

A further 67% are using technology tools. However, only half report consequent improvements in efficiencies. This may come down to several factors, including resistance to new or upgraded technology, under-training and applying new technology to flawed processes.

Finally, 41% of departments are collecting and analysing management metrics.

Again, this has not resulted in increased efficiencies across the board, but as many departments are still in a ‘learning phase’, it’s not unexpected. As teams become more comfortable with the available technology and apply it to their business practices, satisfaction and efficiency rates will increase accordingly.

So what does this mean for legal innovation overall?

Firstly, it should be approached with a view to change management overall.

Technology isn’t a band-aid solution for existing flawed and inefficient processes and systems, but should be viewed as a mechanism for supporting positive change across the board. Ensuring your team is engaged in and motivated by the change and innovation process is key to your ultimate success and can’t be underestimated.

Secondly, managing change and the security concerns that come along with it isn’t a one-person job. Knowledge is power, and it pays to seek out expert help when you need it, as well as taking the time to explore potential solutions and their suitability for your team.

Finally, there’s more than one way to skin the proverbial cat, and when it comes to selecting external counsel, data can be a lifesaver. It can take time to refine the collection and analysis process, but once it’s in place, the resulting insights will be invaluable.

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