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In early December, we published the results of the 2016 Law Department Operations Survey. Now in its ninth year, this survey, carried out in alliance with Consilio, is the oldest and most comprehensive survey that focuses solely on law department operations to provide useful benchmarks.

One of the least surprising data points each year is the number of different functions typical LDO professionals engage in: They spend more than 5 percent of their time in over 10 areas. In total, 29 percent of that time is spent on technology, information security, electronic discovery and records management.

But only 57 percent of survey respondents say they have the right technology to do their jobs. Further, only 63 percent consider their legal technology to be effective, while more than a quarter rank theirs as ineffective.

Yet effectiveness of individual technologies seems to be on the upswing. We asked about five different technologies in 2015 and 2016 (matter management, electronic discovery, intellectual property, contract management and document management), and they averaged a score of 6.78 on a 10-point scale, up from 6.20 in 2015. The four technologies we queried for the first time (electronic billing, litigation hold, board management and entity management) did even better, averaging 7.35.

While these are substantial improvements, they seem to be taking place outside of any real technology strategy. Only 18 percent of respondents say they have a law department technology strategy or three-year road map. This lack might explain why LDOs are lukewarm about their technology. Technology is expensive, in terms of cash outlays and time and human resources spent, so it’s critical to identify the most strategic area of need to gain the most value.

A good plan is also critical as over a quarter of law departments are planning to update, evaluate or implement each piece of core law department technology in 2017.

“Care, attention and investment to the ‘aiming’ is worthwhile and prudent,” says Robin Snasdell, managing director at Consilio. “Often, the ‘Ready. Fire. Aim.’ strategy backfires and can cause loss of investment, loss of credibility, failure, embarrassment or worse.”

1. Downstream E-discovery

One surprising tidbit to come out of the survey is a new movement toward handling more e-discovery work in-house. While the “left side” of the Electronic Discovery Reference Model (EDRM) remained quite stable, the “right side” saw a substantial increase in work moving in. Processing (with an increase of 38 percent), hosting (91 percent), document review (44 percent) and production (58 percent) all saw substantial jumps.

“Law departments are seeking to create value and savings, so if there are options to bring certain functions that drive cost savings in-house, they can look very attractive,” adds Snasdell. “We expect law departments to continue to explore opportunities for creating cost savings and technology innovation, global price points. And desired cost savings will keep this area very dynamic for years to come.”

2. Collaborating with Law Firms

One benefit of law department technology is that it can help departments gain more value with their law firms. In practice, however, this may be more theoretical than actual. Only 53 percent say their law firms are leveraging technology to deliver legal services more effectively and cost efficiently.

A question worth studying is whether law departments are truly giving their firms the tools and permission to really leverage technology for their benefit, as they are not, for the most part, fully sharing their tools and data. While 49 percent of law departments (that have one) allow their law firms weekly access to their electronic billing systems, other technologies are hardly accessed by firms at all. Only 20 percent claim their law firms are accessing their document management systems on a weekly basis, while contract management and law department dashboards are only accessed by 4 percent and 2 percent, respectively, although Snasdell expects this to improve.

3. Metrics and Reporting

Law department metrics programs are still immature, with most respondents pinning their department’s maturity level at one or two on a five-point scale. If LDOs are ever to provide optimum value and be considered a meaningful part of the leadership team, metrics and reporting must improve. A good start for many will be to improve the reporting mechanism on which these programs are based. Currently, 74 percent of law departments still use Excel (at least for some reporting), and 61 percent create at least some reports manually. Only 55 percent say they leverage their electronic billing systems, and one-third have a dedicated reporting tool. “Nothing provides more trust, insight and credibility than solid defined processes and standardized data capture,” says Consilio’s Snasdell.

4. Cybersecurity

While getting full value out of their department’s technology is important, perhaps the biggest single expectation for LDO professionals is related to cybersecurity. While LDO professionals are not generally primarily responsible for cybersecurity (only about 3 percent), they are meaningful influencers (72 percent).

One area where it has become apparent that LDO professionals must step up their game is in working with their law firms to protect the company’s data. Only 16 percent consider their law firms’ cybersecurity provisions to be very effective, and most are not doing very much to understand what steps their law firms are taking: Only 34 percent require cyber questionnaires, and only 35 percent put cyber requirements in their billing guidelines. It’s no surprise that more than a third of the respondents cannot even rate their firms’ ability to protect their data.

This is our ninth survey, and each time we present the data, we are asked the same question: There is so much here, what should I do first? This year, the answer is simple. If you do not have a good handle on what your law firms are doing to protect your data, get on that right away.

In early December, we published the results of the 2016 Law Department Operations Survey. Now in its ninth year, this survey, carried out in alliance with Consilio, is the oldest and most comprehensive survey that focuses solely on law department operations to provide useful benchmarks.

One of the least surprising data points each year is the number of different functions typical LDO professionals engage in: They spend more than 5 percent of their time in over 10 areas. In total, 29 percent of that time is spent on technology, information security, electronic discovery and records management.

But only 57 percent of survey respondents say they have the right technology to do their jobs. Further, only 63 percent consider their legal technology to be effective, while more than a quarter rank theirs as ineffective.

Yet effectiveness of individual technologies seems to be on the upswing. We asked about five different technologies in 2015 and 2016 (matter management, electronic discovery, intellectual property, contract management and document management), and they averaged a score of 6.78 on a 10-point scale, up from 6.20 in 2015. The four technologies we queried for the first time (electronic billing, litigation hold, board management and entity management) did even better, averaging 7.35.

While these are substantial improvements, they seem to be taking place outside of any real technology strategy. Only 18 percent of respondents say they have a law department technology strategy or three-year road map. This lack might explain why LDOs are lukewarm about their technology. Technology is expensive, in terms of cash outlays and time and human resources spent, so it’s critical to identify the most strategic area of need to gain the most value.

A good plan is also critical as over a quarter of law departments are planning to update, evaluate or implement each piece of core law department technology in 2017.

“Care, attention and investment to the ‘aiming’ is worthwhile and prudent,” says Robin Snasdell, managing director at Consilio. “Often, the ‘Ready. Fire. Aim.’ strategy backfires and can cause loss of investment, loss of credibility, failure, embarrassment or worse.”

1. Downstream E-discovery

One surprising tidbit to come out of the survey is a new movement toward handling more e-discovery work in-house. While the “left side” of the Electronic Discovery Reference Model (EDRM) remained quite stable, the “right side” saw a substantial increase in work moving in. Processing (with an increase of 38 percent), hosting (91 percent), document review (44 percent) and production (58 percent) all saw substantial jumps.

“Law departments are seeking to create value and savings, so if there are options to bring certain functions that drive cost savings in-house, they can look very attractive,” adds Snasdell. “We expect law departments to continue to explore opportunities for creating cost savings and technology innovation, global price points. And desired cost savings will keep this area very dynamic for years to come.”

2. Collaborating with Law Firms

One benefit of law department technology is that it can help departments gain more value with their law firms. In practice, however, this may be more theoretical than actual. Only 53 percent say their law firms are leveraging technology to deliver legal services more effectively and cost efficiently.

A question worth studying is whether law departments are truly giving their firms the tools and permission to really leverage technology for their benefit, as they are not, for the most part, fully sharing their tools and data. While 49 percent of law departments (that have one) allow their law firms weekly access to their electronic billing systems, other technologies are hardly accessed by firms at all. Only 20 percent claim their law firms are accessing their document management systems on a weekly basis, while contract management and law department dashboards are only accessed by 4 percent and 2 percent, respectively, although Snasdell expects this to improve.

3. Metrics and Reporting

Law department metrics programs are still immature, with most respondents pinning their department’s maturity level at one or two on a five-point scale. If LDOs are ever to provide optimum value and be considered a meaningful part of the leadership team, metrics and reporting must improve. A good start for many will be to improve the reporting mechanism on which these programs are based. Currently, 74 percent of law departments still use Excel (at least for some reporting), and 61 percent create at least some reports manually. Only 55 percent say they leverage their electronic billing systems, and one-third have a dedicated reporting tool. “Nothing provides more trust, insight and credibility than solid defined processes and standardized data capture,” says Consilio’s Snasdell.

4. Cybersecurity

While getting full value out of their department’s technology is important, perhaps the biggest single expectation for LDO professionals is related to cybersecurity. While LDO professionals are not generally primarily responsible for cybersecurity (only about 3 percent), they are meaningful influencers (72 percent).

One area where it has become apparent that LDO professionals must step up their game is in working with their law firms to protect the company’s data. Only 16 percent consider their law firms’ cybersecurity provisions to be very effective, and most are not doing very much to understand what steps their law firms are taking: Only 34 percent require cyber questionnaires, and only 35 percent put cyber requirements in their billing guidelines. It’s no surprise that more than a third of the respondents cannot even rate their firms’ ability to protect their data.

This is our ninth survey, and each time we present the data, we are asked the same question: There is so much here, what should I do first? This year, the answer is simple. If you do not have a good handle on what your law firms are doing to protect your data, get on that right away.