Legal Operations Chiefs Say Managing Technology and Cutting Costs Are Main Priorities, Not Blockchain or AI

In-house legal operations chiefs see their main priorities as managing legal technology and cost-cutting, primarily on outside counsel spending. Blockchain remains a confusing concept to them, while artificial intelligence is the hottest topic of conversation.

Those are some of the key findings in the 2019 Consero Legal Operations Survey Report, based on a poll of 85 legal-ops executives who attended a recent forum. Consero Group presents executive conferences, and it did the report in partnership with Thomson Reuters Legal Tracker.

Many of its findings ring true to one participant, John Pfannenbecker, deputy general counsel for legal operations and business affairs at World Franchise Inc., parent company of the Subway restaurant chain based in Milford, CT.

“The findings are pretty consistent with what I've been hearing from colleagues,” Pfannenbecker said in an interview this week. “Cost control is my top priority, so I wasn't surprised to see that from a large percentage of others.”

The findings also coincide with what last year's Consero survey found. The 2019 report showed most participants cited legal tech management and cost control as their top priorities, followed by cybersecurity and data privacy. “Cyber and data privacy was handled in our legal department at one time,” Pfannenbecker says, “but we separated it out and gave it to the [information technology] department. But there are in-house attorneys still in it.”

He said he's been doing legal tech work eight years at his company, and “the first five years I didn't realize there was a separate thing called legal ops. That's how new this is.”

The survey said the majority of respondents, 65%, reported their companies are just developing legal ops or are in the early stages of adopting it. Another 29% called their operations “mature,” while only 6% said it was “very mature.”

Pfannenbecker noted: “My team and my chief legal officer think we are so far behind other companies, and then I go to forums like this and see we are as mature or farther advanced than others.”

He said he spends about 75% of his time overseeing and managing the legal operations with a team that includes two other full-time people and one part-timer. “I also act as a traditional in-house counsel on financing and commercial transactions about 25% of the time,” he added.

The report said 38% of companies dedicate two to five staff members to legal ops. About 34% only have one legal tech staffer, while 13% said they have over 10.

A whopping 71% of respondents said their legal technology infrastructure does not meet the needs of their operations. But 74% also reported that they expect legal technology spend to increase in the next 12 months.

“I agree that legal tech infrastructure is a concern for nearly all legal ops departments,” Pfannenbecker said. “Some companies are just now implementing things we implemented years ago.”

He explained his company uses matter management and e-billing software along with contract management, which are the most common form of legal tech in use.

The survey said 95% of the respondents do not use blockchain. “The forum had a breakout session on blockchain,” Pfannenbecker said, “and it's still very confusing as to how it applies to legal departments and workflows. But I think, once people understand what it does, they will say, 'Oh, yes, we have something like that.' Only about 5% of them really understand it right now.”

The survey showed that 64% of respondents said they were considering use of artificial intelligence. “That's one of the hottest topics talked about,” Pfannenbecker said. “We're considering it too, but getting people to move to those types of solutions is very difficult.”

He said some troubling questions include should companies trust AI to do certain jobs, will there be a return on investment to justify the cost, and what could companies do about the human beings it could replace.

“Those are leaps that are harder for nontech companies to take,” he added. “It's easier for tech companies because it's in their culture.”

The next big thing for most companies, including his, is better use of metrics, he said. Besides e-billing, he said his team is looking at what metrics matter most to legal and what does the business side need to see.

The report said 80% of respondents do not have a metrics program that measures the value delivered by legal ops.

It concluded: “Using the right technology tools and deriving actionable insight from metrics will allow legal ops executives to support their legal departments efficiently and effectively to protect and grow their companies.”

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Sue Reisinger is a senior reporter at ALM. Based in Florida, she covers general counsel and white collar crime. She can be reached at [email protected].