A LexisNexis survey of legal departments found a renewed sense of optimism among U.S.-based corporate legal departments. More than 70% of survey respondents, which were mostly comprised of corporate attorneys, said this year has been better as compared to the previous year. The survey also found that corporate legal departments are planning to bring more work in-house, that compliance and operational efficiency are the top challenges, and expect legal budgets and staffing to remain flat.

1. Legally Optimistic
A study on legal departments and legal department operations

2. 1
Legal Department Survey Executive Summary
 Legal departments are feeling more optimistic. While the survey asked questions about legal department goals and
challenges, it also explored general sentiment. Overall (70%), corporate legal departments say this year has been
better as compared to the previously year.
 Top legal department goal is reducing outside counsel spend. Reducing outside counsel spend is the top goal for
corporate legal departments identified in the survey (61%). Rounding out the top five: Proving value to the business
(60%); predicting legal outcomes (48%); automating legal processes (43%); and forecast legal budgets (37%).
 Corporate legal departments plan to bring more work in-house. 54% of legal departments plan to manage outside
counsel spend by bringing more work in-house. Other top means included increasing the usage of AFAs (32%);
developing billing guidelines and rules (30%); consolidate legal work with fewer firms (21%); and implement a matter
management system (21%).
 Top challenges: improving operational efficiency vs. regulatory compliance. The survey found not one, but two
top challenges facing legal departments. 61% of respondents selected both improving operational efficiency and
meeting regulatory and compliance requirements amid a list of common challenges which put these two on parity.
 Legal department budget and staffing mostly flat. The vast majority of respondents – in both cases more than
50% – say legal department budgets will remain flat. However there does appear to be an upside – more than 30% of
respondents expect both budgets and staffing to increase over the next 12 months. Notably, 37% of legal departments
say they plan to invest more in technology.
 The top legal department KPI: forecast to actual spend. Comparing the budget forecast to actual spend (56%) is
the top key performance indicator (KPI) that legal departments say they track. Other KPIs included: year-to-date (YTD)
outside legal spend vs. prior year (47%); legal expenses as a percentage of revenue (35%); total expense for all
settlements and awards (32%); and total legal spend as a percentage of revenue (22%).
 Relationships matter – relationships the top factor in selecting outside counsel. Corporate legal departments
said an “existing relationship” with outside counsel was the most important factor in choosing legal service providers.
Law firm diversity and technology savvy ranked last on a list of possible metrics.

3. 2
Legal Departments are Feeling Optimistic
70% of legal departments surveyed say this year has been better than the last year
Legal Department Optimism
Despite audacious goals and challenges,
the mood of legal departments overall
(70%) is upbeat. Additional anecdotal
responses to this question provide some
indication as to why:
• The business is having a good year –
which means the legal department is
having a good year.
• Businesses are asking for legal
counsel before matters become
problems.
• The legal department has seen an
increase the number of large cases
settled this year.

4. 3
Top Legal Department Goals
61% say reducing outside counsel spend is currently the top legal department goal
Top 5 Legal Department Goals:
1. Reduce outside counsel spend
2. Prove value to the business
3. Predict legal outcomes
4. Automate legal processes
5. Forecast legal budgets
Amid the current legal climate the results
shown nearby are not a surprise.
However, these do underscore and
important trend: it’s not enough to
merely be an effective corporate lawyer.
Today effective corporate attorneys are
charged with managing (and often
reducing) legal budgets and
communicating the value of the
department to the business.

5. 4
The Top Legal Department Challenges
Improving operational efficiency and regulatory compliance
are the top legal department challenges
Top 5 Legal Department Challenges:
1. Improve operational efficiency
2. Regulatory compliance
3. Budget pressure
4. Not enough staff
5. Make better use of technology
The two top challenges facing legal
departments have parity according to
survey respondents. Indeed improving
operational efficiencies and meeting
regulatory compliance requirements may
go hand in hand.
Several surveys – including those
published by other organizations – find
that compliance consistently ranks on
the corporate counsel agenda.

6. 5
Legal Department Budgets and Staffing
They say money can’t buy happiness but it can sure help solve a lot of problems, which is why the charts nearby may
help explain the (cautious) optimism expressed in the first slide.
For the vast majority of respondents expect both legal department budgets and staffing to remain flat. However there are
two notable findings that stand out:
• 32% expect legal department budgets to increase in the next 12 months.
• 27% expect legal department staffing to increase in the next 12 months.

7. 6
Legal Department KPIs
Top 5 Legal Department KPIs:
1. Legal budget: forecast vs. spend
2. YTD outside legal spend (Y/Y)
3. Legal expense as a % of revenue
4. Total expense for all settlements
5. Total legal spend as % of revenue
In open-ended comments, respondents also
noted the following as KPIs their
departments track:
• Savings from moving work typically
performed by outside counsel in-house.
• Total number of cases processed.
• Number of legal transactions closed.
• Business satisfaction with legal services.
The LexisNexis CounselLink consulting
team advises caution in reviewing lists of
measures of legal department performance:
“Instead of trying to determine what others
are doing or looking for a standard list of
reports, it would be more beneficial to
determine what’s most important to you,
your legal department and your company.
Those are the kinds of things to measure
and track.”
56% say legal budget forecasted vs. actual spend is the
top legal department KPI

8. 7
The Means to Manage Outside Counsel Spend
54% of legal departments plan to manage outside counsel spend
How to Mange Outside Counsel
Spend:
1. Move more legal work in-house
2. Increase usage of AFAs
3. Develop billing guidelines and rules
4. Consolidate legal work with less firms
5. Implement a matter management
If managing outside counsel spend is a
top goal for legal departments, this
question answers how most of them plan
to do that. More than 50% of
respondents said they plan to bring more
legal work in-house – a theme that has
been prevalent in similar surveys:
• BTI Consulting: US legal market
exceeds $100 billion
• Trending Legal Spending: Examining
the HBR Consulting Study
by bringing more work in-house

9. 8
Evaluation Factors for Selecting Outside Counsel
An “existing relationship” is the top factor in outside legal service selection
Top Factors in Outside Counsel
Selection:
1. Existing relationship
2. Proven results
3. Responsiveness
4. Efficiency
5. Flexible pricing
This question was a ranking question
where the lower the number the better.
The results shown on this survey are
also generally consistent with previous
studies on the top evaluation factors.
Surprisingly diversity and technological
savvy ranked low on the list of factors.
This despite substantial coverage in the
legal trade media indicating these two
factors are increasingly becoming
important in outside counsel selection.

10. 9
Legal Department Operational Maturity
27% of corporate legal departments are reliant on manual processes
Operational Challenges
Earlier in this survey respondents
identified “improving operational
efficiency” as top legal challenge. In that
context, this question serves as baseline
for benchmarking progress.
Most legal departments give themselves
low marks on a five point scale. 27%
percent say they are reliant manual legal
processes, while 45%, a plurality, say
they have some automation.
About one-fifth (19%) report their legal
department has integrated information
systems. All in all about 8% give
themselves high marks for operational
efficiency in either making data-driven
legal decisions or having the capability to
reliably predict legal results.

11. 10
Legal Department Technology Spending
37% of legal departments plan to increase spending on technology
Legal Department Tech Investment
While most respondents said they
anticipated legal department investments in
technology to remain flat, a significant
number also anticipate additional
investments.
All told about 37% of legal departments
expect to increase spending on technology
which may well be an answer to the top
challenge identified earlier: increase
operational efficiency.

12. 11
Inside Counsel in their Own Words
The final question of the survey was an optional open
ended question that asked: If there was one thing you
could change about the corporate legal department what
would it be? The question earned and eclectic array of
answers from 68 respondents.
Here is a representative sample of verbatim responses:
• More attorneys. Overworked for salary. If I wanted to
work this many hours I would have stayed at the firm for
more money.
• Increase staffing.
• Increase the technology budget.
• Have it be more focused on legal matters and less
focused on day to day operational issues.
• Better document management and better
communication across multiple business areas to share
best practices.
• Get more data and metrics
• Reduce the layers of review necessary within the law
Dept. to finalize work product.
• Collaboration between the different legal specialty areas
for the entire business.
• Opportunities for advancement internally.
• Consistency in management, which changes each year.
• More support staff.
• Larger budget with the ability to bring on a more diverse
staff.
• I would have the best technology for tracking
everything...
• Overcome old procedures that have created some levels
of complacency.
• We would be more integrated with the operations side of
the business and would be more automated where
efficient.
• Update manual processes and stop using spreadsheets.
• Increase efficiency with use of additional technology.
• Use of technology to track billing
• I would really like it if we had a full time Compliance
Officer

13. 12
Are you peeking behind the curtain?
There’s nothing here!
 Survey Methodology and Demographics

14. 13
Survey Demographics and Methodology
This survey was conducted online by polling the readers of a third party legal trade publication from
September 29, 2014 to October 10, 2014. Respondents were required to identify as a legal professional
working for a U.S.-based legal department. Ninety five respondents (N = 95) meeting this criteria
answered the survey. Most respondents reported working for corporate legal departments (85%) while the
remaining were split between non-profit legal departments (10%) and government at all levels (5%).
Respondents were provided an incentive – a chance to be entered in a random drawing for one of eight
prizes – to complete the survey.
Demographics at-a-glance:
• Most respondents seasoned corporate attorneys. 90% of respondents identified themselves as
corporate attorneys and 68% reported holding supervisory positions including associate general
counsel, general counsel and chief legal officer (CLO).
• Broad range of legal departments. A plurality – 39% – reported working for legal departments with
2-5 attorneys, although 22% reporting working for law departments with 20 or more attorneys. 54%
stated their legal department spends $5 million or less per year on outside counsel; 22% spend
between $5-10 million. About 5% reported spending $100 million or more per year on outside counsel.
• Wide geography; myriad of industries. Thirty-four states were represented in the sample – the most
hailed from New York (14%), California (14%) and Illinois (7%). Respondents also represented
businesses in a wide variety of industries; the top five industries were: technology, software or
telecommunications (18%), finance or banking (10%), manufacturing (10%), insurance (8%),
government (7%).

15. 14
Survey Demographics: Respondents by Responsibility

16. 15
Survey Demographics: Organization by Full Time Attorneys

17. 16
Survey Demographics: Organization by Outside Counsel Spend

18. 17
Free Online Webinar about this Survey
What: Pulse-Check Survey of Legal
Department Operations (LDO). Presented by
Kris Satkunas and Mike Haysley.
Who: Corporate legal professionals and
inside counsel
When: Thursday, December 4, 2014 1:00-
2:00 p.m. EST
Where: Free online webinar; register here:
https://cc.readytalk.com/r/rq93haoxjcc9&eom

19. 18
Additional Corporate Legal Resources
 Landmark Benchmarking Reports:
• CounselLink Enterprise Legal Management Trends Reports & Infographic
• 2013 Year-end: Growth in M&A Billings Benefits ‘Second Largest’ Law Firms
• 2013 Mid-year: The Rise of the “Large Enough” Law Firm
 The LexisNexis CounselLink Resources:
• Blog: 5 Tips for Streamlining Your Legal Department
• Blog: The New and Evolving Legal Department Operations Role
• Blog: What are the Going Law Firm Rates by Practice Area?
• Blog: Legal Industry Evolution: Back To Business
• Blog: How Corporate Legal Can Implement AFAs without FUD
• Blog: 6 Emergent Trends from a Corporate Legal Department Conference
• White paper: Pricing Perspectives from Industry Experts
• White paper: 10 Reminders about Increasing your Law Department’s Value
• Webinar: Rackspace Corporate Counsel Finds the Must-Have Attributes of an ELM Solution
• Case study: Kennametal
• Case study: The Cosmopolitan
 Social Media:
• Blog: Business of Law Blog
• LinkedIn: LexisNexis CounselLink
• Twitter: @Business_of_Law or @LNCounselLink
• Facebook: LexisNexis Business of Law
• Google+: +businessoflawblog