ACC Law Department Management 2016 Report includes the perspectives of 300 CLOs, GCs, and legal operations professionals from 37 industries across 25 countries.
WASHINGTON (November 29, 2016) –– Three-quarters of chief legal officers (CLOs) and general counsel (GCs) say their legal departments "almost always" meet with business leaders to discuss risk, while two-thirds say the C-suite values their department's input on decisions and that they contribute to the organization's strategic planning efforts, a new report released today by the Association of Corporate Counsel (ACC) found. The ACC Law Department Management 2016 Report includes the perspectives of 300 CLOs, GCs, and legal operations professionals from 37 industries across 25 countries on the current state of corporate legal departments during a time of disruption in the industry, including increased sourcing to non-legal providers.
According to the report, legal departments most highly valued for their strategic advice are those that maintain consistent budgets, apply innovation to their work, and utilize management practices to drive efficiency. Accomplishments in these areas yield greater organizational influence, the survey found, and contributing to company-wide initiatives increases the overall value the law department provides.
"Demonstrating and growing the value of the law department enterprise-wide has become a key focus for the CLO," said Veta T. Richardson, ACC president and CEO. "The effort was accelerated by the disruption of the legal industry during the financial crisis, but the trend is here to stay, as the company benefits from the department's role as a strategic partner in business decisions."
The ACC survey examined legal department budgets and their impact on enterprise influence, finding that 54 percent of respondents said their departments came within 5 percent of an established budget. The data showed that spending within the budget was easier for smaller legal departments, as they generally face less litigation and smaller regulatory workloads. The exception was the highly-regulated energy industry, which was the sector most likely to report spending within 5 percent of budget.
Among the innovative approaches to work and processes cited by GCs and CLOs, use of alternative fee arrangements (AFAs) was most common, and most likely to be implemented by large legal departments. Implementing AFAs ensured a greater than 90 percent chance of achieving budget targets, helping companies to manage costly litigation and other projects. Looking ahead, 50 percent of survey respondents expect their use of AFAs to increase in the next year, while 30 percent anticipate a decrease. At many companies, hiring a law department chief of operations or other legal operations professional accelerated the deployment of AFAs.
"As the role of the CLO evolves, the leader of the law department is expected to participate in the important discussions that shape the company's trajectory and business strategy," said Iohann Le Frapper, chair of the ACC board of directors and general counsel at ChetWode. "Implementing various management practices and applying innovation, more frequently led by legal operations professionals, provides the CLO with more time to spend on strategy."
The use of efficiency-focused management practices was more common among legal departments with advanced technology and within larger corporate law departments, the survey found. Litigation and regulatory workloads had little bearing on a department's use of management practices. Of the six practices identified, value-based staffing (assigning work to a variety of internal resources, including non-lawyers, based on complexity and risk) was most common, among 75 percent of respondents, while automating processes through technology was used at 65 percent of law departments. The other four management practices were implemented by 20 – 30 percent of respondents.
In addition to data from the 300 CLO, GC, and legal operations respondents, the report captures anecdotal experience and examples from GCs based in Africa, Asia Pacific, Europe, and North America. For more information on the ACC Law Department Management 2016 Report, please visit www.acc.com/ldmreport.
About ACC: The Association of Corporate Counsel (ACC) is a global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other private-sector organizations through information, education, networkingand advocacy. With more than 42,000 members in 85 countries, employed by over 10,000 organizations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel.® For more information, visit www.acc.com and follow ACC on Twitter: @ACCinhouse.
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