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How In-House Legal Teams Can Manage Capacity and Headcount Issues - And Why It Matters

In-house legal teams are constantly faced with the challenge to do more with less. This is because businesses in our current environment, are under immense regulatory pressure, leaving legal teams to manage risk as well as service a high volume of requests from the business. However, despite the increasing workload, headcount and budget remain the same. In fact, General Counsel’s (GC) expect legal workloads to increase by 25% over the next few years with headcount only increasing 3% in the same period (EY). As a result, legal departments are working around the clock but are still seen as a cost-centre and potential bottleneck within the business. With long working hours and reputational issues, GCs are seeing more cases of burnout and higher staff churn rates.  

Why Legal Teams Are Suffering

Increasing workload and decreasing headcount 
Businesses are under immense pressure to reduce costs resulting in resources being taken away from departments that do not directly contribute to the bottom line. According to a study conducted by Ashurst, 24% of in-house legal lawyers state that their legal team’s headcount has been reduced despite workload continuously increasing and expected to increase over the next few years. As a result, lawyers are working around the clock to service the business and do not have the ability to prioritize high-value, strategic work.  

Tighter budgets  
As aforementioned, legal teams are seen as a cost centre within the business and current economic factors have only driven executives to further reduce budgets. Over the past 24 months, 56% of legal teams have stated their budget has been reduced and due to heightened pressure from the board, 88% of GC’s state that they need to further reduce the cost of their legal function over the next 3 years (EY). 

 Increased focus on risk management but limited resources 
Risk management has become a top priority for legal teams however almost two-thirds of GC’s state they do not have the confidence to handle complex risk and do not have the technology to respond to breaches (EY). Furthermore, 68% of GC’s state that they do not have up to date information on their legal entities with exposes the business to further risk (EY) 

How Has This Impacted Legal Teams?

Reputation  
With slow turnaround times due to lawyers working over-capacity, the legal department has developed a reputation for being a bottleneck within the business. This inefficiency has also put the organization at risk of missed deadlines, lost opportunities, reputational damage, and lower profitability. It is no wonder that legal teams are constantly seen as a cost-centre that other departments reluctantly deal with towards the end of a decision-making process out of obligation. 

As legal teams consider how to become more efficient, many general counsels are also considering how they can improve the reputation of their teams and add value to their organizations by becoming a respected, strategic adviser and partner to the business. 

Burn-out and churn – The revolving door of lawyers  
To date, legal has been described as a burn-out profession. A 2018 Legal Trends Report found that 75% of lawyers frequently work outside of regular business hours and this sentiment has only been exacerbated because of new work from home policies. Burnout often leads to lawyers feeling exhausted, detached, and unsatisfied with their work. They end up making mistakes because of low concentration which is critical in a field that requires high attention to detail for risk management. This also leads to higher churn rates.  

How Legal Automation Can Resolve Capacity Issues

Legal automation can take care of a significant proportion of the low-value, high-volume work done by in-house legal teams. In fact, McKinsey estimates around 22 per cent of a lawyer’s job and 35 per cent of a paralegal’s job can be automated. This includes tasks such as: 

Legal automation also allows users from across the business to quickly and conveniently access resources and templates approved by the legal team, via a self-serve system. 

These legal automation platforms can even be used to automatically generate contracts and standard advice consistent with an organization’s requirements. In addition to reducing bottlenecks caused by the need to seek legal advice, this empowers users from across the business to act on behalf of the organization without needing to consult their legal team for matters below risk thresholds as designed by the legal team. 

Automation frees up legal team members to contribute more strategic, complex advice to the business – for example, by being involved in establishing strategic risk and governance programs or negotiations from the outset. Automation also gives legal teams more visibility over the data of the department and the legal activities across the business, including contract data, workflow statuses, work types, and task volume. With a better overview of the legal issues an organization is facing, teams can more effectively manage legal risk, resource plan, and determine where they should focus their efforts to maximize results. 

Check out our white paper to discover how leading legal teams have saved 6000 hours per year by automating legal processes

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