The Association of Corporate Counsel (ACC) published a new report in partnership with Everlaw, the cloud-native investigation and litigation platform, which revealed that almost half of corporate legal professionals (47%) believe technology adoption is the top non-legal skill needed for the next generation of in-house legal professionals.
The State of Corporate Litigation Today report was issued today at the ACC 2022 Annual Meeting, the world’s biggest gathering of in-house counsel. More than 200 in-house counsel and legal operations professionals were surveyed about their department’s approach to litigation, technology needs, criteria for selecting outside counsel and top litigation costs.
Key findings include:
- Moving more work in-house is the most cited litigation cost containment strategy, used by 59% of respondents, with the energy, healthcare, and insurance industries bringing work in-house at the highest rates.
- The ability to adopt new technology is the top non-legal skill needed for the next generation of in-house legal professionals
- Nearly half of all legal departments report spending more than $400 per hour on outside counsel, while the average cost per matter now surpasses $100,000 and almost one-third (31%) of departments reported a higher number of litigation matters.
- Almost half (46%) report that the average length of a typical litigation matter is increasing, with the pharmaceutical and biotech, insurance, and construction industries reporting the largest increases.
Tech is valued and desired in-house, still underutilized
The majority (85%) said that in-house legal professionals need to understand how new technology impacts legal work, and 56% expect their department’s technology needs to increase in a year. However, a firm’s use of innovative technology was the least common selection criterion when considering outside counsel, with expertise and industry knowledge emerging as the most common. Most participants (56%) believe there needs to be stronger collaboration between the legal department and CIO, yet just 4% indicated that their legal department works the closest with their CIO.
“In one of the more surprising findings of the survey, tech prowess ranked as the top next-gen skill for in-house counsel,” said Blake Garcia, senior director of business intelligence at ACC. ”Large-scale implementation of legal technology has been slower than anticipated due to a number of factors, However, we continue to see evidence like this that legal innovation continues to gain momentum by increasing efficiencies and lowering costs – impacting law departments’ work flows and hiring practices in the years ahead.”
It’s been proven that spending a little on technology saves a lot in the long run, yet legal professionals still aren’t implementing technology to cut costs to their full extent. Only 12% of respondents ranked leveraging technology or artificial intelligence as one of their top three methods to save money, with moving work in-house as the top cost-savings strategy on the list. However, corporate legal departments report a strong desire to expand their use of technology. Sixty-five percent of respondents report wanting to use automated redaction tools for personally-identifiable information, for example, while 39% say they would like to use legal hold, early case assessment, and concept clustering technology in their litigation workflows.
“Moving legal work in-house is inherently a technological endeavor,” said Chuck Kellner, strategic discovery advisor at Everlaw. “And because overall costs are the primary factor used to determine whether to settle a matter, reducing costs by bringing work in-house, powered by technology, can have significant impacts on a company’s litigation posture.”
Another forcing function driving technology adoption is the increasing length of litigation matters, as 46% reported an increase in the typical litigation matter. As the amount of discoverable data skyrockets, in-house legal teams need advanced technology to help them sort through documents that once lived in filing cabinets but now encapsulate every email, Slack, text or social media message sent. Being able to move quickly can be key to both controlling costs and improving outcomes, particularly in long-running, high-stakes litigation. Class action lawsuits last the longest, according to 75% of participants who reported an average length of at least two years, with 44% indicating an average length of at least three years.
When it comes to the type of litigation matters that legal teams face, employment and labor issues ranked most common, followed by breach of contract. About one-quarter (27%) reported an increase in regulatory matters, and 22% stated that the number of internal investigations has increased compared to the previous year.
Additional findings from the report include:
- Breach of contract and employment and labor are the most common litigation matters that legal departments face
- The most important rationale for engaging outside counsel in the first place is a firm’s expertise in addressing subject matter, jurisdictional and geographical needs (88%), followed by the ability to complement the corporate team’s capacity (50%).
- The top risk cited was the monetary and reputational risk to the business (38%), followed by the unpredictability of litigation outcomes (18%), the unpredictability of litigation costs (18%) and personnel constraints when managing outside counsel (12%).
Click here to read the full report: “The State of Corporate Litigation Today”