Furthermore, while the above strategies promise some cost savings, they are unlikely to help accomplish law departments’ other priorities related to rethinking risk management, promoting digitization and increasing business enablement efforts.
As Stenberg observes, “Optimizing use of outside counsel provides law departments with the opportunity to shift cost savings to other areas. Reducing the number of providers can also simplify operations. Both outcomes are positive steps forward for law departments and can help ensure the success of other transformation initiatives.”
The challenge of effective insourcing
Insourcing is among the most visible, discussed trends in the legal market in the past decade. Shifting work internally can reduce spend on outside counsel. It also offers the potential for greater control and more integration with the business. For many law departments, however, insourcing has also produced challenges.
Rising workloads is the most obvious outcome of shifting work in-house. General Counsel expect workloads to increase by 25% over the next 3 years, yet headcounts are only expected to increase by 3% over the same period. This mismatch helps explain why 76% of departments say they find it challenging to manage current workloads.
A second challenge is an increase in low-complexity work. Law department leaders report that one out of every five in-house counsel hours is currently spent on low-complexity, repetitive or routine tasks, with 87% confirming that their department spends too much time on these tasks.
As a result, 47% report that increasing volumes of this work have adversely impacted employee morale. Given the importance of retaining and developing talent for law departments, such figures should be a major cause for concern.
Also, as law departments have brought tasks in-house and added more headcount, they have increased the complexity of their department. This complicates efforts to address the priorities of CEOs not directly related to cost control. While insourcing offers some benefits for addressing CEOs’ priorities for rethinking risk management and business enablement, greater complexity may work against these goals.
Law department leaders are split on whether insourcing has, overall, been a good strategy. While 78% believe insourcing offers opportunities for savings, few intend to increase headcount significantly over the next 3 years. To manage this, they will need to turn to technology and process improvement to help optimize the legal department’s operating model.