Workplace Issues

Managing Law Departments With Lower Budgets

By Scott Forman

With a possible global recession looming, signs of caution from corporate legal departments are emerging. For instance, in Altman Weil’s 2019 Chief Legal Officer Survey, 38 percent of respondents said they decreased their total budget last year, up from 29 percent in the 2018 survey; and only 36 percent plan to add in-house lawyers in the next 12 months, down from 42 percent in 2018.

These trends will almost certainly accelerate if broader economic worries turn out to be well founded. That’s grim news for in-house counsel who are already struggling with workloads and pressure to increase operational efficiency. The volume of legal work is not decreasing, so how will that work get done amid declining budgets and decreased in-house hiring?

This article considers two key management challenges for in-house labor and employment attorneys, both of which can be heightened for employers during an economic downturn: the stream of HR-related questions they must now manage on a daily basis and the continued rise of employment-related litigation. It then focuses on two ways in-house legal departments can navigate these conflicting forces.

TECHNOLOGY AND DATA ANALYTICS

Combining the vast data an organization already has about its own business with available technology is one way to combat the pressure to operate more efficiently and effectively.

When it comes to managing employment-related questions and responding to the myriad of issues that arise in the workplace, technology provides an opportunity to create a knowledge bank that can be harnessed to provide more consistent and high quality counsel. Promptly answering each question that arises in the workplace in a one-off fashion uses up vast amounts of time and resources. However, capturing those questions, which often follow similar themes, and the answers provided in a single online platform creates a trusted knowledge bank of information to answer future queries. Drawing on such a platform not only saves in-house counsel time in the response process but also provides a way of storing institutional knowledge in a place where it can be accessed 24/7 across the company.

Gathering and centralizing this type of information also has the added benefit of being able to analyze the data to spot patterns and potential areas of risk. With a growing list of responsibilities and legal issues to manage, it can be difficult for individual in-house attorneys to spot trends within their own companies. For example, they might not realize that a certain employment policy or office is disproportionately involved in claims that escalate into lawsuits. With access to this type of insight, in-house counsel may decide to update specific policies or provide targeted employee training, potentially heading off problems before they balloon into larger issues or costly litigation.

Corporate legal departments see the potential and are eager to take advantage of data and technology to address these issues. More than two thirds of in-house counsel surveyed by Littler recently said they were interested in analyses of their own data to help monitor trends, identify areas of risk and guide decision making.

USING SCALE TO INCREASE EFFICIENCY

Finding the time and resources to implement technology solutions and analyze data can be difficult for corporate legal departments. One way to address this is to leverage the scale of outside legal counsel for staffing and technology solutions. Law firms are in a position to invest in resources and develop platforms that can be scaled across their client base. They also can tap into the vast data they have access to and provide valuable insights to clients.

In the Littler survey referenced above, we asked in-house attorneys what they find most valuable about a law firm’s ability to provide support in relation to staffing. Nearly 70 percent said they want technology solutions that reduce their own need to hire more staff attorneys. Because in-house teams tend to run lean, they want to rely on their law firms for staffing support to scale up or scale down as their volume of legal work ebbs and flows, for quick access to in-depth knowledge and counsel on complex issues, and for technology solutions that help them manage their responsibilities.

Through aggregate and anonymized data across their client bases, law firms can also provide helpful benchmarking information to clients on where their challenges lie and how they stack up against similar companies. For example, having collected case data on nearly 30,000 matters through our proprietary platform for managing employment litigation, we are able to provide clients with a big-picture, industry-wide view of their legal matters. Through this benchmarking data, a client may find that it is spending less than other companies within its industry to settle administrative agency charges, but with more matters ending up in litigation. Or that its cases are settling at later phases of litigation relative to peers, resulting in higher overall spend — attorneys’ fees plus settlement dollars — than average. Armed with this information, the company can decide how to adjust its settlement and litigation strategy to reduce legal spend.

Put simply, law firms can help inhouse counsel manage their workloads and provide better overall counsel, becoming a flexible and seamless extension of these departments’ own teams.

More than three-quarters of chief legal officers surveyed in the Altman Weil study expect a recession within the next two years. Regardless, we know that smart companies and their law firms will look to technology and datadriven solutions to improve, and that many of them will do so together.

Scott Forman is a shareholder with Littler. He focuses on solutions for clients including Littler onDemand for employment law advice and counsel, and Littler CaseSmart for managing employment litigation. sforman@littler.com litigation. It then focuses on two ways in-house legal departments can navigate these conflicting forces.