More Trends Reshaping Corporate Legal Departments: Growing Expertise Leads to Greater Insourcing

More Trends Reshaping Corporate Legal Departments: Growing Expertise Leads to Greater Insourcing

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.

Corporate legal departments are reshaping the way law is practiced today. They’re directly responsible for the allocation of billions of dollars in outside counsel spend and they are making sure that money is used effectively. One third of general counsel have terminated outside counsel for failing to meet expectations, for example, and their demands for greater efficiency and lower costs have helped spur the growth of the alternative legal service provider industry, which has grown from zero dollars in revenue just a few years ago to nearly $9 billion today.

Yet, these changemakers are also changing themselves. They’re devoting more of their budget to internal spend, for example, and investing significantly in technology that can enable them to do more with less. Trends like increased insourcing, the growth of in-house expertise, the embrace of technology, and, yes, an increasingly millennial workforce are shifting the way in-house legal work is handled today.

Growing Expertise: Bringing the Experts in House

A dollar spent on outside counsel can go farther when invested in internal expertise. That’s increasingly the determination of many corporate legal departments who, while still valuing the contributions of their outside lawyers, are directing their investments into in-house expertise. Whether building an in-house litigation team or hiring subject matter experts away from prestigious law firms, corporate legal teams are increasingly doing it for themselves.

Key Statistics

  • 29 percent of in-house legal staff conduct 75 percent or more of their litigation and eDiscovery work in-house, up 12 percent since 2017
  • 67 percent of responding law firms say they are losing business to corporate law departments that are in-sourcing legal work
  • 56 percent of law departments increased their internal budgets from 2016 to 2017
  • 52 percent of legal departments increased their in-house legal staff last year, with over a third hiring on extra attorneys
  • 49 percent of legal departments have a head of operations, 26 percent have a designated IT counsel, and 20 percent of a data analytics professional
“I’m happy to pay top dollar for expert services. I’m not going to pay top dollar for mundane work.”
- Laszlo Kupan, General Counsel, J.D. Power

Many corporate legal departments, faced with ever-increasing demands to reduce cost, have realized that that bringing more subject matter expertise in house can significantly decrease legal costs associated with outside counsel spend over the long term. As Laszlo Kupan, general counsel at J.D. Power explains, “I’m happy to pay top dollar for expert services. I’m not going to pay top dollar for mundane work.” Instead of looking to high-priced outside providers, innovative legal leaders are increasingly looking to bring more work under their own control. After all, why rent when you can own?

“We’re focused on hiring qualified legal professionals in house. We’ve got great employment attorneys in house, we’ve got transactional attorneys who are able to do the work that would otherwise have to be done by outside counsel or outside vendors.”
- Katie Lynch, Director of Legal Support, Veolia

But it’s not just the mundane tasks that legal departments are taking control of. They are increasingly bringing in talented subject matter experts to help lead their legal work. “We’re focused on hiring qualified professionals in house,” explains Katie Lynch, director of legal support at Veolia North America, the water, waste, and energy company. “We’ve got great employment attorneys in house, we’ve got transactional attorneys who are able to do the work that would otherwise have to be done by outside counsel or outside vendors.”

Although building and training an internal team typically carries a hefty up-front cost, in-house systems allow legal departments to take on more work, spend less on routine tasks, and exercise a greater level of control and oversight. Because internal staff are familiar with company personnel and values, and highly specialized in their field, they can provide increased value by pairing their knowledge of business practices and strategy with their legal expertise.

In-Housing Legal Work for Savings and Control

Growing in-house expertise goes hand-in-hand with insourcing a greater range of legal tasks. Today’s corporate legal departments are increasingly in-housing work that would once have been sent out to vendors and law firms, and realizing significant savings in the process.

Key Statistics

  • Up to a 98 percent reduction in data requiring outside counsel review when eDiscovery and ECA are brought in house
  • 47.5 hours saved when corporate data is processed by cloud-based software, rather than third-party vendors
  • 43 percent reduction in data sizes when automatic deduplication is applied
  • $24,500 in savings per matter when performing ECA assessment in house

For corporate legal departments looking to cut spending, outside counsel fees are first on the list. Companies are significantly reducing costs by insourcing common tasks, from contract review to early case assessment. What work does out is often determined by a cost-benefit analysis.

“The trend for a lot of years was to go outside counsel and have a lean in-house team. Now I think companies are realizing that they can hire their own legal professionals and have those folks driving things.”
- Katie Lynch, Director of Legal Support, Veolia

That realization has allowed many corporate legal departments to take command of their legal work. “We’ve insourced all of our eDiscovery so all of our processing, initial review, and even production is done in-house using Logikcull,” says Veolia’s Katie Lynch.

That’s an approach more and more companies are taking.

One of the world’s largest companies, for example, recently revolutionized its approach to litigation by in-housing its discovery process. Facing growing data volumes that made discovery increasingly expensive and stuck with complex software that frustrated outside counsel and contributed to excessive review costs, the company—whose name we're keeping confidential pursuant to a nondisclosure agreement—decided to take control over its costs and data by controlling more of the discovery process.

Today, by bringing discovery in-house and mandating the use of cloud-based discovery software to all its outside law firms, the company has unified hundreds of outside counsel users on the same discovery platform, reduced the average time to start review from days to minutes, secured discovery data with strict user permissioning, and massively reduced the data requiring review by outside counsel.

“We’re able to reduce data needing outside counsel review by 98 percent. Outside counsel only get the stuff that really matters.”

The results are evident in the statistics above. By in-housing discovery, the in-house legal department reduced the data requiring outside counsel review by up to 98 percent. In a hypothetical case involving 7,500 documents, in-house counsel can now cull out all but 150 documents requiring outside counsel review. That data reduction alone saves $24,500 in review costs per matter. And because data processing is as simple as drag and drop, the team no longer has to wait several days to begin review. That time savings of nearly two days frees up company internal resources to do even more work in house.

These in-house legal teams aren't alone aren’t alone. Thanks to the proliferation of easy-to-use, easy-to-implement legal technology, corporate legal departments are now quickly scaling up to handle more and more tasks that used to be given over to outside counsel—and taking control over their data and their costs in the process.

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