What trends are shaping in-house legal departments today? Watch the new video from Logikcull to find out. Then read on as we survey two emerging shifts in corporate legal departments and what they could mean for you.
Changing Relationships With Outside Counsel: From Advisees to Partners
It’s hard to overestimate the importance of outside counsel expertise to in-house lawyers. In-house legal teams repeatedly rank outside counsel’s specialized expertise as the most important factor in engaging outside lawyers and as the quality in which outside counsel most meet or exceed expectations.
But that does not mean that in-house counsel are content to be a passive receptacle for OC advice. Spurred by growing in-house expertise, greater comfort being "risk aware rather than just risk averse," and constant pressure to reduce spend, in-house counsel are increasingly asking outside counsel to partner with them on meeting business and legal goals. They are, as Claire Dekar, Associate General Counsel at Maersk says in the video above, “looking to be more partners, as opposed to advisees.”
Key Statistics
- 86 percent of in-house counsel rate specialized expertise as very or critically important in their outside counsel hiring decisions, higher than any other factor.
- 61 percent of in-house counsel say their outside counsel exceed or far exceed expectations for expertise.
- 76 percent of law departments identify controlling outside counsel costs as a top priority.
- 29 percent planned to decrease their use of outside counsel.
- 81 percent of law departments say they require budgets for major matters and 79 percent provide guidelines for billing, expenses, matter staffing, and management.
- 79 percent of departments provide standard billing and management guidelines to their law firms, though only 60 percent routinely enforce those guidelines.
Corporate law departments are revamping, and reevaluating, their relationships with external counsel.
“We’re becoming more of a decision driver. We still very much value the expertise our outside counsel brings… but we’re looking to be more partners, as opposed to advisees.”
-Claire Dekar, Associate General Counsel, Maersk.
In addition to insourcing a record number of legal tasks, companies are looking to reduce overall spend and increase management over the external firms they work with. According to a 2017 Altman Weil survey of 280 legal officers in the U.S., law departments are focused on greater overall cost reductions and improved budget forecasting, as well as non-traditional fee structures, such as non-hourly or per-attorney billing.
Generally, a hands-on approach to billing and project management leads to more satisfying external relationships. According to Thomson Reuters’s Legal Executive Institute, law departments are more likely to have a positive perception of outside counsel if the company brings external lawyers in at the right time, rather than the start of the matter, provides sufficient background information to the external firm, such as how a matter relates to company goals, and has an up-front discussion about pricing and realistic timelines.
For in-house attorneys, this shifting balance has empowered them to take more control over their legal process, their data, and ultimately their legal spend. It presents opportunities for enterprising lawyers as well, however, as those legal professionals able to meld their highly-valued expertise with corporate business needs are building valuable relationships that can span entire careers.
Want to learn more about how innovative firms are scaling up to attract corporate clients? Watch the webinar here, featuring William Delgado, Partner at Willenken, Wilson, Loh and Delgado, and Rob Shives, General Counsel at Shinko Electric.
The Rise of the Millennial In-House Legal Professional
Today, millennials make up the largest segment of the American workforce, including nearly half a million lawyers and law school grads. This demographic boom, which encompasses anyone born between 1981 and 1996, ranges in age from a youthful 23 to a not-quiet-as-youthful near 40. Millennial's unique take on work and technology is one of the trends reshaping the face of the in-house legal department.
Key Statistics:
- There are 75 million millennials in the U.S.
- Since 2008, assuming an average 1L age of 24, over 422,000 millennials have graduated law school.
- In 2015, millennials became the largest segment of the labor force in the United States
- 50 percent of millennial employees expect to be working in a smart office in the next five years
- 70 percent of millennials feel advanced tech is crucial to a collaborative, productive, and efficient work environment
- 80 percent of millennials say workplace tech would have an influence when deciding to take a job
So, what sets millennials apart? First, their increased focus on work-life balance. Only 15 percent of millennials consider a high-paying career to be one of the most important things in their life, and 78 percent believe it is more important to enjoy their work than earn a lot of money. That predisposes millennial lawyers to workplaces where they can take pleasure in a job well done and still have a few hours left in the evening to cultivate their own personal life. And to many, that means leaving the grinding hours of a BigLaw career behind for the more manageable demands of in-house legal practice.
Secondly, millennials, are uniquely focused on technology. The oldest millennials, after all, came of age in a sea of AOL CD-Roms, serenaded by the hum of dial-up internet. The younger ones grew up with omnipresent access to the internet, social media, and cloud-based everything.
They are a tech-savvy, tech-friendly generation overall and they want their employers (and law departments and law firms) to be as well. For millennial attorneys, it’s a red flag if a firm’s technology isn’t up to snuff, and this hesitation is enough to derail recruitment. In a recent interview with Thomson Reuters, one associate explained, “If a firm is lacking in the tech department, I would raise an eyebrow and think, do I want to be part of a dinosaur organization?” And there are scores of young attorneys just like him.
There are many reasons law firms are slower to embrace technology, including a conservative approach to changing practices, limited budgets, or a fear that new tools could expose them to increased risk and liability. Cybercrime is on the rise, and law firms are attractive targets, but embracing technology actually makes it easier to secure important information—and many new tools are cheaper, safer, and easier to implement than legacy options.
“Empowering our in-house professionals to make the smart decisions that we hired them to do is a huge win for all parties involved.”
-Mooni Patel, Senior Legal Operations Manager, Lyft
Millennials genuinely believe that technology makes them more efficient and leads to higher-quality work. They want to work in an environment that supports innovation and they are often looking for new tools that can help them get more done, better. For corporate legal teams, that means pressure not to stand in the way and to speed up existing processes—speeding up review and vetting of new technology as well as the adoption and implementation of new tools.
But this is not just about meeting demands for technology. It’s about empowering in-house teams. As Mooni Patel, Senior Legal Operations Manager at Lyft explains in the video above, “it’s important to empower anyone who is working towards a mutual goal. Empowering our in-house professionals to make the smart decisions that we hired them to do and, similarly, for outside counsel, empowering them and trusting them to make the decisions we have onboarded them for, that’s a huge win for all parties involved.”
