Wolters Kluwer & ELTA Benchmark: Many European Legal Departments Still Lack Clear Digitalization Strategy
Wolters Kluwer and the European Legal Tech Association (ELTA) have joined forces to produce a comprehensive report which explores the impact of digitalisation within corporate legal departments across Europe. The report reveals that budget allocation is the main challenge to acquire legal technology, the universal lack of long-term digital strategies and the most common challenges teams face during technology implementation projects.
Drawing insights from an extensive survey encompassing over 520 in-house legal team members, which took place between May and August 2023, the report examines the current state of digital transformation in-house legal.
Summary of the key findings
- More than a quarter (27%) of legal departments said they do not have a digital strategy in place. Of those who said they did have a digital strategy in place, 38% said that the digital strategy was only in place for the next 12 months and is not long-term.
- Just under half (46%) respondents said their department now has a “legal operations function”, which includes teams who are responsible for technology adoption and optimizing digital processes, but 47% admitted their organisation did not.
- Securing tech budget is a major challenge for legal departments according to 57% of respondents. For those legal departments with an established digital strategy in place allocating budget for legal digital solutions is crucial. However, 38% revealed the absence of a specific budget earmarked for digital tools. This number rises to 43% when respondents stated that their department’s annual legal spend was higher than €100,000.
- Legal departments are currently using a wide range of methods to manage their contracts and legal documents. 43% are using shared drives, while 30% are using contract lifecycle management software. Less popular methods are the paper archive, used by 11% and spreadsheets, used by 5%.
- Return on investment is the most important factor influencing the legal department's decision to purchase technology products and services, according to 66% of respondents. Slightly less than half say training and support and customisation are important factors. The least important factors that influence the decision to purchase include the financial viability of the vendor, the ongoing relationship with the vendor, and speed of delivery.
- Respondents had a wide range of opinions about how they expect artificial intelligence to impact their profession, however the outlook is generally optimistic. They believe AI can help improve efficiency, reduce time spent on mundane tasks, and accelerate workflows. Most seem to think the transformation will occur gradually over the next few decades, and some predict that AI will replace some junior legal department and legal secretarial roles in the near future.
Sergio Liscia, Vice President & General Manager of Legal Software at Wolters Kluwer Legal & Regulatory, says: “Although the necessity and benefits of digital tools are clear to legal professionals, findings of the survey indicate that legal departments are still at a relatively early stage in their digitalisation journey. Securing the budget for tools remains the main challenge, and some legal departments are yet to determine their digital strategy, with over 25% of those surveyed professionals saying they do not have a clear digital strategy. Half of the surveyed legal departments also mention stakeholder buy-in as a major challenge when it comes to introducing new legal technology.
“Nevertheless, it is evident that legal professionals are aware that technology will be a key ally in addressing their challenges, including the most urgent ones such as process structuring, centralising legal data, and managing heavy workloads. Legal departments anticipate they will be able to leverage AI to automate tasks and elevate the legal department to a more strategic position within the company.
“To accelerate progress on the digital maturity curve, legal departments could be seeking guidance and support to work on long-term digital strategies and to demonstrate return on investment and benefits of new technology, required to secure budgets and to get buy-in from internal stakeholders.”
Key data about the survey’s participants
- The survey covers participants from over 30 different industries, with most prominently “Banking, Insurance, and Financial Services” (12%), followed by the IT and Telecommunications sector (10%), and finally, Administrative Services and Associations (8%).
- Out of the collected responses, 28% of respondents are based in Germany, followed by France (21%). 18% of respondents are affiliated with legal departments based in the United Kingdom, while 16% hail from Belgium. The remaining 17% represent a mix of countries, including the Nordic nations, the Netherlands, and Spain, among others. Our study also received contributions from legal professionals in Hungary, Austria, and the Czech Republic, albeit on a smaller scale.
- Among the survey participants, more than half are Senior members of their legal department. 20% are Heads of Legal, while 19% hold the position of Senior Legal Counsel. Chief Legal Officers constitute 17% of the respondents, closely followed by General Counsels at 16%. Additionally, 10% specified their affiliation with the Legal Operations team division.
- A total of 68% of respondents indicated that their legal team consists of fewer than 10 individuals. Meanwhile, 32% of the surveyed legal departments comprise at least 10 team members, with 12% of these departments employing a minimum of 50 individuals.
- 34% of the surveyed legal departments indicate that their organisation's annual revenue is below €125 million. Over 20% report an annual revenue ranging between €125 million and €500 million. Notably, 19% of the surveyed companies boast a substantial annual revenue exceeding €1 billion.