Leaders of mid-sized European legal departments are experiencing a fundamental transformation in their roles. Historically, legal departments at companies with annual turnover between $5 million and $25 million have not been called upon to act as strategic business partners. But this is changing according to a recent study from Wolters Kluwer’s ELM Solutions.
The firm, with headquarters in Houston and clients in more than 190 countries, provides enterprise software solutions that facilitate workflow and collaboration across the legal community – connecting corporate legal departments and insurance claims organizations to their trusted law firm partners.
According to the results of the study, only 28 percent of General Counsels (GCs) of medium-sized legal departments say that the legal department’s role over the last three years has been strategically focused and viewed as an integral part of the business leadership. However, when asked about the next three years, the picture changes drastically, with a full 60 percent reporting that they expect to take on that strategic business role.
Reinforcing this shift, 53 percent of respondents from mid-sized legal departments said that for the last three years their role has been mainly functional, but with frequent input to the broader business strategy. For the next three years, while the strategic expectations are set to grow, the number planning to continue in this more limited, functional capacity drops to 31 percent.
“The trend is clear: GCs in Europe anticipate the need to significantly increase and expand their strategic business contributions over the next few years,” notes Mark Stapleton, Managing Director of Wolters Kluwer’s ELM Solutions for EMEA. “But how can they make this transition? What tools can they use to support the type of operational insights they will need to make an increased contribution to meeting business goals?”
The first resource that legal departments will need is more time. “When manual tasks, such as managing documents, processing invoices, and updating spreadsheets, need to be repeated regularly, it takes time away from higher-value legal and strategic business priorities,” Stapleton says. “It’s not surprising that increasing efficiency was shown to be the top priority across all legal departments. This becomes more critical as GC’s shift their focus to strategy.”
Under 40 percent of mid-sized legal departments in Europe are using “at least one legal-specific technology.” With the majority of departments increasingly focused on strategy, this indicates a glaring gap between managing strategic goals and current resources that simply facilitate functional tasks. Without a comprehensive solution that simplifies day-to-day operations via automated processes, it is difficult to imagine where legal managers will find the time for strategic planning, Wolters Kluwer argues.
“A robust e-billing system, for example, can ensure that invoices comply with billing guidelines, automatically adjust non-compliant line items, and route adjusted invoices to the correct reviewer, all before a staff member even sees an invoice,” Stapleton says. “Beyond standalone software applications that save time and reduce costs, legal solutions that integrate with related technologies deliver visibility across previously disparate aspects of the legal operation, providing the ‘big picture’ perspective that triggers strategic insights.”
Currently, only 30 percent are using “legal-specific technology capable of addressing multiple areas of legal process and integrating with other technology applications throughout the business”, according to the findings of the report, The General Counsel Barometer. These departments are well positioned to become more involved in the strategic direction the company is taking because they have a holistic view of their operations across the enterprise.
“Reporting, for example, becomes far more valuable when it accesses data that was previously inaccessible in disconnected applications,” Stapleton adds. “When systems are integrated, performance, costs, and results can be analysed across practice areas and geographies, building a more complete view of the company’s legal function. This gives GCs the tools to make good decisions about the direction of the department and to support the overall goals of the company.
Medium-sized legal departments face some of the most difficult operational challenges, Wolters Kluwer’s research shows. They are large enough, with significant enough legal expenditures, that a lack of efficiency can be extremely costly. Yet, these departments are small enough that they often have not yet broadly adopted the more efficient, scalable processes and tools that are common in larger organisations. The survey found that the largest companies have embraced advanced legal technology, with 77 percent "using integrated legal technology solutions” that enable them to achieve the company’s strategic requirements.
“With integrated technology priced for the size and complexity of the legal department strategic insight is now more affordable than ever,” Stapleton notes. “By following in the footsteps of the largest enterprises, mid-sized departments can achieve their goals while increasing efficiency. Indeed, integrated legal management systems can provide the foundation that the department’s success will be built on.”
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