Legal Process Outsourcing: Has COVID-19 Changed Anything?
With pandemic pressures on the rise, in-house teams may be more willing to look outside for help.
Within the enterprise, in-house legal departments are bearing much of the brunt of the COVID-19 crisis. In addition to disruption in their own workflows, these teams are now having to manage unplanned legal work remotely and address a variety of exacerbated risks related to litigation, investigations, privacy, security, and employee behavior and safety — you name it, all while having to consider the ramifications of a recessive economy and an uncertain recovery.
In truth, the need to do more with less has been has been the story for in-house legal teams for quite some time – well before the pandemic began. In EY Law’s 2019 Reimagining the Legal Function Report, 89% of North American respondents noted they were going through a large or moderate increase in demand for management information while at the same time planning to reduce legal function costs by an average of 13%.
The pandemic has upped the ante, though, causing a surge in work for in-house legal departments. In Gartner Inc.’s June 2020 survey, 68% of legal and compliance leaders say they struggled to manage their workload amidst the pandemic and related unplanned work. In Thomson Reuters’ Legal Department Operations (LDO) Index 2020 Report, 68% of departments reported an increased workload in the previous 12 months, and 79% of them said it was due to the pandemic.
Rolling hard with the punches, in-house legal has persevered, but they may now be considering additional help. For those who already rely heavily on outside counsel, legal technology, or alternative legal service providers (ALSPs) in their day-to-day work, those dependencies have likely been a crucial part of managing everything during the crisis.
For those who do not, the pandemic may have moved the needle, forcing some to now consider expanding or adopting new technology tools or developing outside partnerships that enable them to meet the demand for services as the pandemic evolves — even as they try to control or reduce costs. Legal departments that are able to readily consider and accommodate change are ultimately in a stronger position, and as pandemic challenges are successfully navigated, prior barriers to change may be easier to overcome.
To a certain extent, the conflict between demand and budgets, now heightened by the pandemic, has spurred interest in ALSPs. Both the EY report and Thomson Reuters’ Alternative Legal Services Providers 2019 Report show that more companies are partnering with ALSPs for diverse functions due in part to attempts to drive cost savings. ALSPs also offer access to specialized expertise that may be lacking in-house, such as contract management, process mapping, litigation and investigation support, artificial intelligence (AI), and technology-assisted document review — expertise and tools which can be used strategically to drive value for the business.
Adoption of legal technology
The pandemic and the sudden necessity of distributed teams have indeed pushed some departments to finally invest in technology they may only have been eyeballing previously, either bringing it in house or relying on outside providers to implement.
The LDO Index found 27% of departments reported implementing more legal technology solutions because of the pandemic, 30% increased their legal technology budgets, and 44% simplified their workflow by increasing their use of technology tools. A remote workforce brings a new set of considerations regarding contracts, billing, privacy, cybersecurity, and productivity; technology offers an efficient way to address these concerns.
Too, a younger workforce and an increased comfort with technology-focused services and products have eroded much of the skepticism and resistance that existed previously, enabling easier implementation. There has now been ample evidence that legal technology can do more — and do it better and more securely — than incumbent manual processes, and most in-house leaders have come to accept it.
Leaders in the industry also believe COVID-19 will lead to significant change regarding legal technology. Mark Harris, founder of legal talent provider Axiom, believes, “This is going to accelerate and catalyze what could be a real positive for legal tech and alternative providers who are looking to help companies do things more efficiently,” Bloomberg Law reported.
Alternative fee arrangements
A willingness to consider alternative fee arrangements (AFAs) may also be moving the needle. Business leaders are looking to reduce expenses with vendors and outside law firms, and AFA’s are an important driver. The LDO Index reported 30% of departments increased their use of AFAs, and 60% said they had up to 20% of their outside legal work under AFAs. Whether or not the continuation of the pandemic and a recessive economy will impact the use of AFAs remains to be seen, but in-house leaders are looking for the best possible deals on products and services.
Unchanged priorities, but reconsidered solutions
Despite the changes COVID-19 has brought, in-house departments’ priorities remain largely the same. They are concerned with controlling outside counsel costs, improving internal efficiency, and bringing measurable value to their businesses. The impact of the pandemic may have only been to speed up how they will continue to address those priorities in terms of adopting technology, relying on diverse alternative services, and striving for more efficient workflows, but it will likely be viewed later on as a positive influence.
Related article: In-house Legal: Adjusting to Pandemic-Driven Changes