The in-house cost constraints off the back of COVID-19

The in-house cost constraints off the back of COVID-19

29 December 2020 By Emma Ryan

New research has provided insight into where legal departments have felt the most impact from the coronavirus pandemic.

A recent Gartner Inc. survey of 126 legal leaders has shown the majority of teams are expecting lasting repercussions as a result of the pandemic.

Forty-nine per cent of those surveyed said they anticipated further legal budget reductions in the second half of 2020, and 66 per cent said they expected their department’s headcount to remain the same.

Going forward, 45 per cent of those surveyed anticipated remote work to be a top impact on legal work, while 39 per cent expected impacts from legal and regulatory changes.

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“Responding to the pandemic and its aftershocks revealed some significant weaknesses for legal departments,” said Caroline Van Allen, senior research specialist in the Gartner Legal & Compliance practice.

“Low technology adoption and insufficient knowledge management capabilities left many teams unprepared to immediately switch to remote work, so they were trying to implement those fundamental technologies and upskill their staff remotely.

“As 2021 quickly approaches, legal departments are looking to close some of those gaps.”

When it comes to legal operations, the survey revealed 76 per cent of teams believed maintaining legal technologies is among the top priorities, followed by building knowledge management processes, which 74 per cent of respondents selected.

“In an environment where legal leaders are seeking to reduce spend and yet carry out more complex, unpredictable legal work, legal departments that can leverage technology solutions and legal operations to drive greater efficiency in-house will be the winners,” Ms Van Allen noted.

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Finally, the survey uncovered the proportion of legal spending on outside counsel instead of spend in-house has declined from 50 per cent in 2018 to 44 per cent in 2020. 

“We’ve seen legal departments gradually shifting more work in-house over the last few years, but this year we’re also starting to see them make longer-term in-house investments to try and offset some of the lost access to expertise that comes from reducing their reliance on outside counsel,” Ms Van Allen explained.

“Our clients have increased the proportion of specialists in their teams by 21 per cent since 2018 and this has enabled them to reduce outside spend without having to compromise on work quality.”

The in-house cost constraints off the back of COVID-19
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