A new Association of Corporate Counsel (ACC) study indicates corporations today praise their legal department most highly for adhering to budgets, providing strategic counsel to the business, applying innovation to solve business challenges and using management practices to drive greater efficiency. According the ACC Law Department Management 2016 Report, showcasing success in these areas can help the legal department demonstrate its value to the broader business and help the law department secure greater influence over the company.
“Demonstrating and growing the value of the law department enterprise-wide has become a key focus for the CLO,” said Veta T. Richardson, ACC president and CEO. “The effort was accelerated by the disruption of the legal industry during the financial crisis, but the trend is here to stay, as the company benefits from the department’s role as a strategic partner in business decisions.”
In addition, the study which includes responses from 300 CLO, GCs and legal operations professionals around the globe, indicates AFA use is expected to increase in the coming year with exactly half of study participants indicating they plan to use AFAs in 2017. Not surprisingly, AFAs were cited as the most commonly used innovative way to control outside legal costs and maintain budgets in large legal departments. Here’s a brief breakout of the study’s key findings:
- Use of AFAs ensured a more than 90 percent chance of achieving budget targets and helping companies manage costly litigation and other projects, according to the study.
- Exactly half of law departments expect use of AFAs to increase in the coming year with just 30 percent of legal departments expecting them to decrease.
- More than half, 54 percent of study participants said they came within 5 percent of an established budget and the findings indicate outside legal spending was more easily managed in smaller legal departments versus larger ones. There was an exception however, in the highly regulated energy industry, which was most likely to adhere to spending within 5 percent of budget.
- 75 of respondents reported members of the legal department “almost always” meet with company business leaders to discuss operational issues and areas of risk. In addition, an evenly split 65 percent of respondents cited members of their executive team regularly solicit feedback from the law department on business decisions and the exact same amount cited the legal department is a regular contributor to the company’s strategic planning efforts.
In keeping an eye toward efficiency, a vast majority of legal departments (75 percent) cited using value based staffing as their most common efficiency-focused management practice, while use of technology to automate processes was used in 65 percent of law departments.
“As the role of the CLO evolves, the leader of the law department is expected to participate in the important discussions that shape the company’s trajectory and business strategy,” said Iohann Le Frapper, chair of the ACC board of directors and general counsel at ChetWode. “Implementing various management practices and applying innovation, more frequently led by legal operations professionals, provides the CLO with more time to spend on strategy.”
To learn more, be sure to check out the full ACC Law Department Management 2016 Report.