Implementing Legal Operations: Balancing Budgets, Burnout, and Technology
In 2024’s current business climate, adaptation is a must-have skill. From navigating constant regulatory changes to adapting to rapid technological advancements and managing budgetary pressures, all while operating within an increasingly competitive legal landscape, general counsel (GCs) are making fast, critical decisions on budgeting, resourcing, and technology to effectively manage their teams.
A recent webinar featuring legal industry leaders William Burkey (Vice President, Head of Consumer Services Practice, Axiom), Sharon Donnigan (Legal Operations Consultant, Axiom), Amelia McPherson (Global Head of Legal, irdeto), and Brent Dyer (Director of Legal Operations, Trend Micro) explored findings from Axiom’s global in-house survey, which features insights from over 300 GCs. The survey findings highlight the real-world challenges and strategic priorities of legal leaders across diverse industries and offer a comprehensive view of how legal departments are navigating today’s complex environment, shaping the discussion around budgeting, resourcing, and technology within in-house teams.
Maximizing Value: Navigating Budget Constraints
In the face of an average 11% budget reduction reported by GCs from 2023 to 2024, many in-house legal departments have been forced to make tough decisions and find creative ways to manage resources effectively. Unfortunately, even when their allocated budgets remain steady, legal leaders may find their actual spending is restricted.
And in-house legal departments are increasingly operating in a landscape where budgets remain flat or effectively decrease due to inflation and rising external costs. For legal teams facing these constraints, a flat budget can feel like a reduction, especially when external legal expenses continue to climb. This environment requires a strategic reevaluation of how internal and external resources are used to ensure maximum value and efficiency.
One critical step is reassessing how internal teams are utilized versus when third-party costs are incurred. Legal leaders should critically examine long-standing processes and systems to determine whether they still deliver value or if their effectiveness has diminished over time. This exercise can help identify opportunities to optimize internal workflows and reduce reliance on costly external providers. Legal departments should regularly audit their operations, asking whether current practices serve their evolving needs.
More Insights on Legal Budgeting
Get a first look at where GCs are looking to increase their legal department spend next year, how they plan to deploy their budget overall, and more budgeting insights.
Prioritizing investments in initiatives and resources that provide clear returns is key. For instance, focusing on tools, processes, and partnerships that directly enhance the department’s efficiency or reduce risk can drive meaningful value back to the business. This approach ensures every dollar spent contributes positively to the overall goals of the legal department and the broader organization, positioning the team as a proactive and strategic partner within the company.
Balancing Budgets and Team Morale
In-house legal teams are increasingly grappling with heightened workloads, limited resources, and a significant rise in employee burnout. Nearly 98% of GCs surveyed report increased turnover and a sense of their teams being overworked, leading to serious retention challenges.
As companies recognize the cost benefits of handling legal matters internally, they load more work onto their in-house teams, often stretching resources thin and contributing to burnout. To help manage this dynamic, legal leaders must prioritize creating processes that alleviate the burdens on their teams. This can involve investing in technology solutions or workflow optimizations that streamline tasks, making day-to-day responsibilities more manageable.
One of the most effective ways to support in-house legal teams is by investing in technology that automates routine tasks and minimizes administrative burdens. Attorneys, who are typically averse to change, can sometimes be resistant to new tools or processes. However, when they understand the potential benefits of technology, such as contract lifecycle management (CLM) systems and the integration of AI, they often find these tools invaluable in reducing the time spent on repetitive tasks.
For legal leaders, the key is to foster an environment that encourages openness to technological change and demonstrates the value these innovations bring to their teams. By proactively addressing inefficiencies and implementing solutions that make legal work more manageable, organizations can help prevent burnout, improve retention, and empower their legal teams to focus on what truly matters—contributing to the business in impactful ways.
Proper resource utilization, including bringing in the right talent and ensuring that teams are aligned with the business’ evolving needs, is imperative. But this strategy goes beyond hiring for specific specializations; it focuses on recruiting individuals who can be trained and equipped with the necessary skills to support the team’s objectives. This approach ensures the team remains agile and adaptable, capable of responding to new challenges as they arise.
Investing in the development of current team members and new hires is essential for maintaining a competitive edge. This includes not only technical training but also equipping legal professionals with the skills they need to operate efficiently within the team. But when hiring new talent isn’t feasible due to budget constraints or market challenges, exploring alternative staffing solutions, such as interim talent or alternative legal service providers (ALSPs), can be a strategic move. These options often prove more cost-effective than traditional law firms and provide focused, undistracted support, as ALSP lawyers are generally dedicated to the tasks assigned without the competing demands typical of law firm environments. This approach can help in-house teams manage workloads effectively, maintain service quality, and prevent burnout among core staff members.
Utilizing Flexible Talent for Enhanced Legal Operations
Leveraging flexible talent is increasingly essential for optimizing legal operations and improving efficiency. Here’s how to effectively utilize flexible talent to address your organization’s legal needs:
Understand Your Needs
Assess the specific areas where flexible talent could add value. Evaluate tasks that require specialized knowledge or temporary support and identify processes that could benefit from external expertise. This might include niche projects, temporary increases in workload, or areas where internal resources are stretched thin.
Select the Right Providers
Engage with alternative legal service providers (ALSPs) or flexible talent platforms to find the right fit for your needs. These providers offer targeted expertise and can be more cost-effective than traditional law firms. They also offer scalability, allowing you to adjust the level of support based on your current requirements.
Build Strong Relationships
Establishing a solid relationship with your flexible talent providers can lead to better outcomes. Look for providers who are not just service vendors but who become integrated into your team. They should understand your business context and work seamlessly with your internal team, rather than functioning as distant outside counsel.
Focus on Business Acumen
Ensure that your flexible talent not only has legal expertise but also understands the business side of your operations. This approach aligns their work with your strategic goals and your business’ bottom line, and it ensures that the advice and support provided are practically useful, not just conceptual.
Evaluate Cost-Effectiveness
Regularly review the costs associated with flexible talent versus traditional legal services. The goal is to find a balance between quality and expense, ensuring that you are getting the best value for the work being performed. Flexible talent often provides a more affordable solution for standard legal tasks compared to high-priced law firms.
Adapt and Integrate
Be open to adapting your legal workflows to integrate flexible talent effectively. This might involve revising internal processes to better align with the capabilities of your external resources. By doing so, you can maximize the efficiency and impact of your flexible talent.
Monitor and Adjust
Continuously monitor the performance of your flexible talent and adjust as needed. Regular feedback and performance evaluations can help ensure that the external support meets your expectations and adapts to any changes in your legal needs.
The Future of AI in Legal Operations
Artificial Intelligence (AI) continues to be a major trend in legal operations, with legal leaders increasing allocation of budgets toward AI and emerging technologies. In fact, 96% of GCs are planning to adjust their budgeting to accommodate these advancements. This shift is expected to result in both a rise in overall budgets and an increase in expenditure on technology.
AI is rapidly becoming a game-changer in the legal sector. One of the most significant applications of AI in legal operations is in contract lifecycle management (CLM). Advanced AI tools are now capable of automating various aspects of contract management, from review and redlining to extracting valuable metadata. These capabilities not only streamline processes but also provide deeper insights into contract data, which can aid in tracking obligations and ensuring compliance.
The adoption of AI is not without its challenges, though. Concerns about bias, compliance, and data privacy are prevalent, and rightly so. But some AI providers are addressing these issues by adhering to strict security standards and regulatory requirements. For example, AI solutions that are designed to comply with data protection regulations like GDPR help minimize risk related to data privacy and security.
As budgets for AI and technology expand, legal departments are presented with new opportunities to enhance their operations. By allowing AI tools to handle routine and repetitive functions, legal professionals can focus on more strategic tasks. This shift not only improves efficiency but also helps legal teams make more informed decisions based on data-driven insights. And the integration of AI into legal operations is likely to become more prevalent in the year ahead, reflecting a broader recognition of its value by in-house legal teams.
Whether you’re looking to streamline operations or maximize your budget, Axiom can help.
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