In-house departments need efficiencies but not investing in tech: Deloitte report

A Deloitte study says technology is a “critical factor” missing in the potential efficiency of legal departments and law firms in Canada but just 15 per cent of chief legal officers and representatives of law firms view investment in new efficiency tools as a top priority.

Shelby Austin says technology tools are the ‘single most underutilized opportunity to increase efficiency and effectiveness for in-house departments.’
Shelby Austin says technology tools are the ‘single most underutilized opportunity to increase efficiency and effectiveness for in-house departments.’

The recently released “Canadian Legal Landscape 2017: Issues and Trends Facing Canadian In-house Counsel and Law Firms,” examines how legal services are currently performing and how the legal industry is dealing with disruption and adapting for the future as viewed by those in the profession.

In-house respondents to the survey indicated that more investment in contract management, compliance, litigation management and workflow management technologies would have a material impact on their legal department’s efficiency.

However, investment in technology does not rank high on their priority list even thought 90 per cent of CLOs have ultimate spending authority for technology investments. Add to that the fact that more than 50 per cent anticipated no change in technology investments in the coming year.

Many are not using tools that could make their lives easier despite the fact more than 50 per cent of CLOs interviewed by Deloitte are not satisfied with how contracts are managed in their department. On the other hand, many are using e-discovery and project management software — considered technology tools “not impactful to their business.”

The majority of law firms surveyed are considering adopting some form of new technology within the next five years; however there remains uncertainty around which types should be adopted.

With so many other competing interests in-house these days a lack of attention to future investment in technology could be holding back progress, says Shelby Austin, partner and national strategic analytics & modelling leader at Deloitte.

It could be CLOs are just having a hard time dedicating the time to investigating the potential.

“I think what we’re seeing is that we’re in the nascent stages of some of this technology, so companies need to go up that maturity curve in order to become more comfortable in presenting a cohesive business case,” says Austin. “What was quite surprising to us is that only 15 per cent wanted to buy in when it seems quite clear where those tools can be applied. We actually think it’s the single most underutilized opportunity to increase efficiency and effectiveness for in-house departments.”

But in-house counsel are also dealing with the challenges of cybersecurity, regulatory issues, or helping the business grow and so they may not have made the time to see how technology can improve how they operate and haven’t made the leap to prioritize the investment.

The report showed billing systems are considered the No. 1 tool for finding efficiency but if you look at perceived efficiency gains contract management is where the technology has caught up the most, says Austin.

“It could have game changing impact using enhanced machine learning and other technologies to really optimize a contract portfolio,” says Austin. “It can allow two things — in-house departments could demonstrate to their boards that times are changing and as a function they are interested in the same technologies being bandied about at the board level as being potentially disruptive in any given industry.”

The report also found that CLOs appear focused on determining the optimal organizational structure for in-house departments to meet the needs of the broader organization, and law firms have begun to restructure to accommodate client needs.

The study also found that the majority of CLOs plan to insource more high value work formerly done by law firms, but only 41 per cent plan to increase headcount in their departments. Many are looking at process improvement activities. However more than 80 per cent of those surveyed don’t apply any benchmarks to evaluate the size and structure of their departments despite an interest in metrics.

Deloitte conducted the survey of about 100 general counsel and representatives of law firms across Canada between July and December 2016.

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