Key findings and strategies from the Thomson Reuters Institute (TRI) 2023 State of the Corporate Legal Department Report
Corporate legal priorities are shifting around the globe. The Thomson Reuters Institute spoke with over 1,500 corporate legal professionals from companies with over $1 billion in global revenue to learn about changing law department priorities and outlooks.
These findings reflect top priorities for corporate law in 2023 and beyond. Managing these transformative times may be a challenge, but there are strategies legal departments can lean on to make the most of the opportunities ahead.
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Here are some of the key findings of the report:
- Compliance is a major focus: Data from the 2023 State of the Corporate Law Department Report found that globally, compliance and new regulatory requirements are top of mind for legal departments. Some 22% of legal departments cite it as their top strategic focus, up from 15% in 2019.
- Spending is trending upwards: Corporate legal departments, led by firms focusing on regulatory work, expect to increase their net spend. However, increases in litigation costs and prevention are also drivers, along with compliance around global regulatory issues like environmental, social, and governance (ESG), cryptocurrency, and data protection.
- Smaller firms are benefiting from increased workload: Some of these spending increases tie directly to risk management and litigation preparation. An increasing number of smaller firms are seeing a growing share of Fortune 50 litigation work as more firms look to outsource to control costs and maximize value.
- Departments are trying to strike a balance between office/remote: Corporate law departments are trying to find the right balance between in-office and remote work for both efficiency and flexibility. Across the globe, hybrid working is the most popular choice, but there are still challenges with setting guidelines and making the most of in-person collaboration.
What strategies can corporate legal departments deploy?
Legal professionals across the globe are being told to do more with less. Some 65% of corporate law departments are experiencing increasing matter volumes, while nearly 60% are keeping budgets flat or decreasing them.
That puts more pressure on corporate departments to optimize spending and maximize value. Here are a few strategies to approach these challenges.
Improve operational practices
The State of the Corporate Legal Department Report highlights a shift in legal departments’ approaches to protecting the firm from risk. Compliance with changing global regulatory burdens is now the top priority for most departments, and risk management is becoming a key component of overall cost control. With regulatory transformations and risk mitigation more complex than ever, in-house attorneys increasingly are seeking outside help from firms with fewer than 250 associates.
These firms are proving cost-effective and can provide higher value than their larger, more expensive counterparts. By partnering with smaller firms, companies recognize the benefits of tailored support and specialized expertise.
This shift in approach indicates a larger trend toward more efficient and effective legal support — it is likely to continue as companies recognize the benefits of working with smaller firms from both a cost-cutting and value-maximization perspective.
Become more efficient
The last few years have brought several disruptions to the workplace. However, one thing is certain: Remote work is here to stay, at least in some form. Most departments are still grappling with the details of hybrid work but have shifted decisively to a hybrid model, with 71% of firms reporting it as their employee’s primary working pattern.
While hybrid work provides more flexibility, some legal departments struggle with balancing the needs of in-office meetings, activities, and collaboration sessions. Those who have found the “best of both worlds'” approach tend to lean on set guidelines that encourage in-person connections and innovation sessions rather than total employee autonomy in deciding schedules.
Hybrid work stands out for many respondents through improved efficiency, workflows, and productivity. In a world where legal professionals in corporate departments are seeing matter volumes grow, often with increasingly complex challenges, it’s critical to adopt tools that automate and streamline workflows. Technology can help legal departments keep up to speed on high-value mission-critical tasks around regulatory, risk, and compliance concerns.
Optimize the department
Alternative legal services providers (ALSPs) now play an increasingly critical role in the legal ecosystem, especially in corporate law departments concerned about meeting new and changing regulatory risk and compliance standards around the globe.
ALSPs can help identify, monitor, and mitigate compliance risk, provide training and reporting, and carry out corrective actions for breaches. The Alternative Legal Services Providers 2023 Report found nearly a quarter of corporate legal departments plan to increase spending in this category in the future.
Even for those corporate legal departments not expanding their budgets for regulatory services in the upcoming year, they may still consider reorganizing their service providers to optimize value. This trend may extend to other practice areas looking for new opportunities to improve processes and legal workflows.
Embrace solutions to improve operations
In an era of increasingly complex and fast-paced regulatory changes, corporate legal departments are looking to maximize value, by taking measures to mitigate risk and reduce litigation while keeping a close eye on the budget.
Corporate legal departments should continue look for ways to improve practice efficiency, optimizing technological and process improvements for added protection and stability.
Detailed analysis of the increasing importance of compliance, as well as information on spending and priorities by region and sector