data/information security and privacy challenges law department benchmarking … · 2017-04-25 ·...

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Challenges and Initiatives in the Coming YearAlthough their rank varies depending on industry, four interrelated challenges lead the list for 2015 and 2016: increasing or changing regulatory requirements, internal resource constraints, industry economic pressures, and data/information security and privacy challenges. Many of the regulatory issues companies currently face relate to data privacy and cybersecurity concerns, and industry economic pressures certainly influence law departments’available internal resources.

A number of law departments’ planned initiatives relate to these challenges. The most commonly identifiedinitiatives reflect an overall emphasis on strategic and disciplined management of spending, client satisfactionand performance measurement, proactive informationgovernance, and tools to manage the flow of information,such as document and contract management systems.

Slight Increase in Legal SpendingOn average, law departments increased their spending, but at a lower rate than last year. The average increase in legal spending from 2014 to 2015 was 1.7%, as compared to 2.2% from 2013 to 2014. While the majority of respondents reported an increase, 28% reported a decrease in legal spending.

LAW DEPARTMENT BENCHMARKING

REPORT HIGHLIGHTS

Huron Legal’s (now part of Consilio) 2015 Law Department Benchmarking Survey1, the sixth conducted in alliance with The General Counsel Forum, reveals a focus on further enhancement and refinement of the manner in which law departments operate. Many best practices have been widely adopted, such as dedicated law department operations managers, e-billing and matter management systems, matter-level budgeting, and preferred provider programs. Now law departments are embarking on new initiatives that target issues such as client engagement, process improvement, information management, and company strategy, all while meeting the demands of a fast-changing legal environment.

DEGREE OF CHANGE IN TOTAL LEGAL SPENDING

0 10 20 30 40 50 60 70 80 90

Internal resource constraints

Industry economic pressures

60%

47%

0 10 20 30 40

Data/information securityand privacy challenges

Industry economic pressures 50%

0 10 20 30 40 50 60


Increasing or changingregulatory requirements

Support for the business during major transaction or litigation event

50%

50%

39%

#10 Industrial Goods & Services

0 10 20 30 40



Legal risks in emerging markets

39%

39%

#11 Technology

#13 Average Change in Total Legal Spending

2.2%

1.7%

2013-2014 2014-2015

#14 Degree of Change in Total Legal Spending

#15 Average Change in Total Legal Spending | by Revenue Segment

Percent reporting changefrom 2014 to 2015

Percent reporting changefrom 2013 to 2014 16% 26%19%13%10%8%9%

19% 20%17%15%8%11%9%

8% to 10%4% to 7%1% to 3%0%-3% to -1%-7% to -4%-10% to -8%

$0 - <2B

0.0%

4.2%

#16 Average Change in Total Legal Spending | by Industry

p23p23

p23

$0 – <2B

$2 – <10B

$10+B

$158,627

2011 2012 2013 2014

$155,328

$192,479

67%69%79%93%93%

2014 2015

3% 5%

0 50 100 150 200 250

100%

Top 80%

$10+B

$2 – <10B

$0 – <2B8

73

240

3

12

24

$200,000$112,399 $168,212 $163,703

AVERAGE CHANGE IN TOTAL LEGAL SPENDING

2.2%Avg change in total legal spending 2013-2014

1.7%Avg change in total legal spending 2014-2015

1 The survey was formerly called the IMPACT® Benchmarking Survey.

®+

2

0.40%

0.22%0.26%

0.12%0.16%

0.07%

0 10 20 30 40 50 60 70 80 90

10% 20% 30% 40% 50% 60%

60

1. Increasing or changing regulatory requirements

2. Internal resource constraints

3. Industry economic pressures

4. Data/information security and privacy challenges

5. Adaptation to internal reorganization, process, or technology changes

6. Legal risks in emerging markets

7. Support for the business during major transaction or litigation event

8. Information governance challenges

9. Business client satisfaction with legal services delivery

10. Synergies/integration following mergers and acquisitions

11. Employee retention

51%

50%

42%

41%

28%

14%

9%

20%

13%

7%

20%

0 10 20 30 40 50 60



Adaptation to internal reorganization,process, or technology changes

52%

48%

48%

#6 Consumer Goods & Services

#5 Top Challenges in 2015 and 2016

#2 Industry Sector #3 Revenue Segment

#4 International Presence

0 10 20 30 40 50 60




53%

53%

48%

#7 Energy & Utilities




80%

60%

47%

#8 Financial Services & Insurance

0 10 20 30 40 50 60 70 80 90




75%

63%

50%

#9 Healthcare

0 10 20 30 40 50 60



Support for the business during major transaction or litigation event

50%

50%

39%

#10 Industrial Goods & Services

0 10 20 30 40 50 60 70 80



Legal risks in emerging markets

67%

39%

39%

#11 Technology

48%

52%

Median internal legalspending as a percent of

total legal spend

Median external legalspending as a percent of

total legal spend

#17 Internal vs. External Legal Spending

#13 Average Change in Total Legal Spending

2.2%

1.7%

2013-2014 2014-2015

#14 Degree of Change in Total Legal Spending

#15 Average Change in Total Legal Spending | by Revenue Segment

Percent reporting changefrom 2014 to 2015

Percent reporting changefrom 2013 to 2014 16% 26%19%13%10%8%9%

19% 20%17%15%8%11%9%

8% to 10%4% to 7%1% to 3%0%-3% to -1%-7% to -4%-10% to -8%

$0 - <2B $2 - <10B $10B+

0.0%

4.2%

2.4%

1.0%1.4%

0.5%

% Change from 2014 to 2015




Consumer goods & services

Energy& utilities

Financial services& insurance

Healthcare

Industrial goods & services

Technology

1%

2.7%

5.7%

1.4%

3.3%

0.8%

2%0.1%

4.3% 4.0%

-1.2%0.8%



93%

2%

4%Other vendor

Discovery provider

Outside counsel

#19 Global Company Legal Spending

#69 Median Number of Law Firms Used for 80% and 100% of Spending | by Revenue Segment

#70 Global Company Law Firm Benchmarks

#68 Key Benchmarks

#74 Formalization of Outside Counsel Performance Review Process | by Revenue Segment

Median total legal spendingas a percent of revenue

Median external legal spendingas a percent of revenue

Median internal legal spending as a percent of revenue

p25

p25

p24

p23p23

p23

$0 – <2B

$2 – <10B

$10+B

$158,627

2011 2012 2013 2014

$155,328

$192,479

8%

12%12%19%

5%

26%

42%

58%

15%

35%

55%

65%

$0 – <2B $2B – <10B $10+B

Alignment with Department’s Legal/Risk Management Strategy

Efficiency of Resource Management

Adherence to Budget/BillingGuidelines

Matter Resolution/OutcomeResponsiveness to ClientQuality of Technical/Strategic Advice

43%67%69%79%93%93%

Law Firm Scorecards

Reporting to Department Leadership

Business Client InputReview Process with the Primary OutsideCounsel Attorney

20152014

Legal ResearchContract Management

Other DiscoverySupport Services

Document Review

8%15%

60%30%20%

50%

Individual Attorney Evaluations

24%37%41%49%71%

2014 2015

3% 5%

0 50 100 150 200 250

100%

Top 80%

$10+B

$2 – <10B

$0 – <2B8

73

240

3

12

24

$200,000$112,399 $168,212 $163,703

0 50 100 150 200

0 10 20 30 40 50 60 70

100%

Top 80%

$10+B

$2 – <10B

$0 – <2B

Median number of firms used for 80% of spending


Non-U.S. spending & firms

U.S. spending & firms

#71 Department Intiative: Development of a preferred provider program for use of outside counsel

Planning to implement within the next 2-3 years

No plans at this time

57%

57%

7% 12%25%

Currently implemented

Implementation in progress in 2015

#73 Formalized Outside Counsel Review Process

79%

21%

Yes No

0 20% 40% 60% 80% 100%

4%

29% 13% 26% 32%

26% 32% 30% 13%

29% 67%

$10+B

$2 – <10B

$0 – <2B


Currently Implemented


Planning to implement within the next 2 - 3 years

49% – U.S. Locations Only 51% – U.S. and Non-U.S. Locations

Technology (includingpharmaceuticals & medical devices)

Industrial goods & services

Healthcare Financial services & insurance

Energy & utilities

2% – Education & not-for-profit*

Consumer goods & services

15%17%

15%

14%

20%

17%

$0 – <2B

$2 – <10B

$10+B

25%

32%

43%

Legal research Invoice reviewIntellectual property services Trial preparation support

Market reviews

Court reporting Contract management/review/drafting

Due diligence

57%60% 35%79%62% 52%

42%42%35%

15% 13%

#75 Alternative Service Providers Usage

4

14

9

55

18

185

61

17

18

2

55

8



0

10

20

30

40

50

60

For the vast majority of matters

For matters meeting a defined criteria such as

anticipated spending

Ad hoc usage/no pre-defined criteria

Preferred provider

RFPs/competitive bidding

Non-U.S. revenue & spending

U.S. revenue & spending

TOP CHALLENGES IN 2015 AND 2016

0% 20% 40% 60% 80% 100%

32%

27%

7%

21%

21%

17%

17%

24%

26%

18%

28%

27%

21%

22%

23%

23%

21%

22%

18%

15%

18%

11%

15%

13%

12%

9%

11%

10%

13%

16%

21%

34%

57%

43%

44%

51%

51%

45%

43%

51%

1. Formalization of outside counsel performance review process

2. Development of an enterprise information governance program

3. Tracking of department metrics and performance indicators

4. Conducting an internal business client satisfaction survey

5. Legal spend analytics

6. Contract management

7. Document management

8. Electronic records management

9. Conducting pricing/rate negotiations with outside counselthrough a structured program

10. Implementation of defensible deletion policies and procedures

#12 Top Ten Department Initiatives Planned for the Next Three Years

No plans at this timeCurrently implemented Implementation in progress in 2015 Planning to implement within the next 2-3 years

TOP TEN DEPARTMENT INITIATIVES PLANNED FOR THE NEXT THREE YEARS

Management of Spending While Emphasizing ValueLaw departments continue to become more sophisticated in their management of spending, with 67% of respondents using matter-level budgets and 74% having, or planning to implement, structured programs for conducting rate negotiations. They are also better managing their outside counsel, which has a direct impact on spending. The majority of responding law departments (57%) have preferred provider programs for outside counsel and use a relatively small number of firms (a median of 8 across all respondents) for 80% of their work. Many are also making internal efforts, such as looking to increase the number of lower-cost resources such as paralegals and junior attorneys to build the department’s support structure.

At the same time, law departments are focusing on value. Internally, the majority track metrics and department performance indicators. 43% percent conduct internal business client satisfaction surveys and more have plans to do so. Externally, law departments still have the opportunity to improve how they systematically measure value: only 21% of respondents have a formalized outside counsel review process, although many, especially in larger companies, plan to implement one in the next few years. Most respondents use some form of alternative fee arrangement—a value-based model when well implemented.

3

Development ofan enterpriseinformationgovernance

program

34%

27%

27%

11%

Implementationof defensible

deletion policiesand procedures

51%

18%

15%

16%

Implementationof an electronic

recordsmanagement

system

45%

24%

22%

10%

Implementation ofa "Bring Your Own

Device" (BYOD)program

36%

10%6%

48%



Planning to implement within the next 2-3 yearsNo plans at this time

DEPARTMENT INITIATIVE: INFORMATION GOVERNANCE

NO

YES58%

42%

ENTERPRISE CYBERSECURITY AND/OR DATA PRIVACY PROGRAM

$0 − <2B

23%$2 − <10B 13%10%

9%62%$10+B 4%24%

55%

8% 28%12%52%




DEPARTMENT INITIATIVE: DEVELOPMENT OF AN ENTERPRISE CYBERSECURITY AND/OR DATA PRIVACY PROGRAMby Revenue Segment

NO

YES

21%

79%

THIRD-PARTY INFORMATION RISK ASSESSMENT PROGRAM

Information Governance and Data Privacy/Security InitiativesCompanies are recognizing the importance of information governance programs to leverage information’s value and reduce risk. Enterprise-wide information governance programs are in place (34%) or planned (38%) at most respondents’ companies.

Reflecting the perceived importance of data and information security and privacy as a challenge, the majority of responding companies reported they have an enterprise cybersecurity and/or data privacy program. Many who lack a program plan to implement one soon, especially larger companies. But law departments are not so systematic in protecting their data outside company walls: only 21% percent of responding law departments currently have a third-party information risk assessment program, indicating an opportunity to better ensure the protection of company data in the hands of law firms and other service providers.

Discovery ManagementNew discovery management survey questions reveal additional areas where law departments have opportunities to further refine their operations. Discovery management programs are fairly common at the largest companies, but relatively few companies with revenue under $10 billion have them, even though for companies with any volume of litigation those programs can reduce risk by improving consistency and defensibility and save money by limiting the need to “reinvent the wheel” with each new case.

16% 68%$0 − <2B 16%

20%$2 − <10B 8%

26% 19%$10+B 53%

2%

48%24%





DEPARTMENT INITIATIVE: IMPLEMENTATION OF IN-HOUSE DISCOVERY/LITIGATION READINESS PROGRAMby Revenue Segment

$10+B

26%

19%

52%

2%$2 − <10B

8%

24%

16%52%

$0 − <2B

15%

23%

62%





DEPARTMENT INITIATIVE: IMPLEMENTATION OF IN-HOUSE DISCOVERY CASE/PROJECT MANAGEMENTby Revenue Segment

© 2016 Consilio LLC. All Rights Reserved. Neither printed nor electronic versions of the 2015 Consilio Law Department Benchmarking Report may be forwarded, distributed, or shared with any person outside the recipient’s company without the explicit prior written consent of Consilio. The Survey reports are only for the internal use of the company to whose representative Consilio sent it.

+

Development of aninternal diversity program

Development of anoutside counsel/vendor

diversity program

20%

6%

18%

55%

8%

51%

4%

37%




DEPARTMENT INITIATIVE: DIVERSITY PROGRAMS

Diversity ProgramsResponding to numerous studies about the value of diversity in the legal profession, law departments are beginning to seize the opportunity to make a difference by using their spending leverage to promote their providers’ diversity. While nearly half of reporting law departments have or plan to have internal diversity programs, only 20% currently have programs to promote diversity in their outside counsel and vendors. Over the next several years, an additional 24% of responding departments plan to implement diversity programs with their external providers.

As revealed by these highlights of the 2015 report, law departments are continuing to evolve and fine-tune their operations to meet the needs of their clients and the fast-changing legal environment. While they must continue to focus on costs, many have reached a stage where they can look beyond the costs and focus on the value of the services they deliver and the manner in which they deliver them.

Bret BaccusManaging [email protected](713) 222-5910

About the 2015 Law Department Benchmarking ReportThe full 2015 Law Department Benchmarking Report summarizes the data collected from 119 companies of varying size and industry, both domestic and global. The report is a comprehensive source for practices, metrics, and trends driving law department operations, including a variety of benchmarks on legal spending, law department organization and staffing, outside counsel and vendor management, and legal technology. In addition to those topics, this year’s survey inquired more deeply about how discovery operations fit within the law department, about information governance and data privacy and security, and about department culture issues such as diversity and career development. This year’s report also includes a bonus feature highlighting law firm billing rate trends as tracked in Consilio’s Sky Analytics database.

For more information about the complete report, please contact:

http://www.huronconsultinggroup.com/Expertise/Legal/Legal-Analytics

data/information security and privacy challenges law department benchmarking … · 2017-04-25 ·...

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