IN-HOUSE COUNSEL TRENDS REPORT

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1 2017 IN-HOUSE COUNSEL TRENDS REPORT

2 2017 In-house Counsel Trends Report Acknowledgements The Association of Corporate Counsel (ACC) Australia would like to acknowledge and thank the people who made this report possible. To the 391 ACC Australia members who participated through completion of the In-house Trends Survey, we thank you for your time and willingness to share your experiences, practices and insights for the benefit of the wider profession. We also wish to acknowledge and thank our Corporate Alliance Program Partners; whose generosity enables us to provide quality services to our members. The copyright in the 2017 In-house Trends Report is owned by the Association of Corporate Counsel (ACC) Australia. All rights are expressly reserved. 1

3 Contents Overview... 3 Work-Life Balance... 4 Typical Hours... 4 Pro-bono Work... 4 Overall satisfaction... 4 Workplace Policies... 4 Importance of Work-Life Balance in Employer Choice... 4 In-house Operations... 5 Longevity of Operations Function... 5 Qualifications of Operations Personnel... 5 Potential of Creating an Operational Position... 5 Outsourcing... 5 Policies and Practices... 5 Panel Arrangements... 6 Barrister Briefing... 7 Legal Process Outsourcing... 8 NewLaw Business Models... 8 Legal Software...10 New Tools...10 Budget...10 Anticipated improvements due to new legal software...11 Future Directions

4 Overview ACC Australia has a commitment to keeping members abreast of trends within the in-house profession. Each year we survey members to gain insight into consistent and immerging challenges, working conditions and practices within in-house legal departments. Respondent Status 6% 13% 38% 43% This year s survey was completed in September 2017 by 391 respondents from a range of industries, government departments and not-for-profit CLO, GC, Head of Legal Senior Lawyer organisations. Seventy-six per cent of Junior Lawyer Contract/other respondents listed themselves as fulltime employees, with 19% part-time and the remainder in casual, contract or other employment arrangements. More than 80% of respondents hold senior roles. In the 2017 Trends Survey we wanted to gain a better understanding of the interplay between the personal and working life of in-house counsel. We found that work-life balance is perceived to be easier to achieve through working in-house as opposed to private practice due to access to flexible working arrangements, regardless of how readily they are accessed. Reducing legal spend is a continued pressure for in-house legal departments. One way of reducing spend is to brief barristers directly, rather than through external counsel. The survey explored to what extent, and why, in-house counsel opt for direct communications with barristers. Workload management also remains a challenge for in-house counsel. We were interested to discover how common it is to have an operational role (such as finance, administration, human resources, for example) within in-house legal departments. We also asked how the use of outsourced legal services is being used to handle increasing internal demand, finding a range of factors contribute to engaging external assistance. Technology and innovative service delivery continues to be a trending issue in the legal profession. Last year we surveyed our membership regarding the level of understanding and use of NewLaw business models, finding further education was required within the profession as to the options and benefits of NewLaw strategies. We reintroduced the question this year, finding awareness and use of NewLaw initiatives has risen. The following section of this report takes a deeper look at work-life balance for in-house counsel. 3

5 Work-Life Balance Hours Worked Typical Hours Three quarters of the sample reported spending at least 40 hours per week at work, with a further 22% working hours per week. The workload pressures many in-house lawyers experience is evident with a quarter of the sample working at least 50 hours per week. Pro-bono Work Twenty per cent of respondents reported participating in pro bono work. Of those, 17% were involved in altruistic activities through their own channels. Just 2.34% performed pro bono work through internal work programs. More of those who were not involved in pro bono work referred to being interested in altruistic participation (48%), than those (31%) who claimed not to be currently interested in pro bono work. Time constraints (75%) were noted as the greatest hurdle to undertaking pro bono service, followed by lack of opportunity (26%) and lack of appropriate insurance (23%). Work-life Satisfaction Very happy Happy Neutral Unhappy 8% 15% 22% 53% Overall satisfaction Although in-house lawyers are known to work long hours, three-quarters of the sample referred to being either happy or very happy with their level of work-life balance. Workplace Policies Very unhappy 2% Most respondents (84.5%) felt their 0% 20% 40% 60% organisation s policies were adequately supportive of caregivers and parents. Working from home was the most highly utilised work-life balance initiative, with 85% of respondents stating they take up opportunities to work from home. Other initiatives include: a reduced hours schedule (40%); additional leave days (33%); rostered days off (13%) childcare facilities (5%) 70+ hours hours hours hours hours hours 1-20 hours 1% 3% 2% 7% 21% 22% 43% 0% 10% 20% 30% 40% 50% Importance of Work-Life Balance in Employer Choice Work-life balance was viewed as very important to those surveyed, with 65% of respondents referring to work-life balance as either an 4

6 important (25%) or very important (29%) factor in choosing an in-house role. Although work-life balance policies were seen to be a positive aspect to their employment, 40% of respondents were reluctant to take advantage of work-life balance policies due to the perception that this could adversely impact their careers. In-house Operations In this year s survey we were interested to discover what level of operational support (for example, managing finance, IT/systems, project management, external counsel liaison, administration, HR and so forth) is provided to for the typical in-house legal department. Only 21% of respondents reported having a position dedicated solely to legal operations in their team. 74% have no dedicated operational support (5% were unsure). unsure 6+ years 3-5 years 1-2 years Role Longevity 13% Longevity of Operations Function Of those with an in-house operational role, 10% reported this to be a newly created role (less than 12 months), while 30% referred to the role having been in place for six or more years. Qualifications of Operations Personnel < 12 months 10% Thirty per cent of respondents with an in-house 0% 10% 20% 30% 40% operational role reported that the person currently in the position has a legal tertiary qualification, while 55% stated the person holding the operational role in their organisation had no legal tertiary qualification. Potential of Creating an Operational Position Only four per cent of respondents stated they were considering introducing an operational position into their legal function in the next year. Sixty-nine per cent of respondents were not considering introducing such a position and 27% were unsure. Outsourcing Policies and Practices 21% 26% 30% Eighty-six per cent of respondents reported having internal processes in place in their organisation that must be followed prior to engaging external counsel. The most common processes referred to were obtaining a fee estimate (53%) and gaining sign-off from General Counsel (53%). Competitive procurement processes were listed by 16% of respondents, whereas decision making on a business case or proposal basis were listed by 15%. Non-legal 5

7 executive sign-off was required in 13% of responses and 14% of respondents referred to there being no specific processes in their organisation. Panel Arrangements Fifty-one per cent of respondents stated their organisation has a set a panel of law firms used for outsourcing work. Panel Changes Forcast 3% 8% 3% 4% 7% 23% 52% No Yes Possibly Always open Unsure Govt Panel Other Half of those with provider panels did not believe the composition of the panel would change over the following 12 months and 23% were in the process of reviewing or intending to review their panels over the next 12 months. In most cases panels were reviewed on a two or three yearly basis. Three per cent of respondents stated their organisation continually reviews their panel and is always open to removing or adding firms based on the demands at hand at any given time. We ll be reducing our panel by removing high cost inflexible firms We have a range of firms we use based on area of speciality May be changes to the allocation of work between different firms - will depend on the work which arises and conflict issues The panel is working well, but there may be some changes around the periphery Less expensive providers will be used more often Cost and value has meant we are moving away from our current provider, and to another one. We just weren't getting the support or love from our current provider 6

8 Barrister Briefing Briefing barristers directly, as opposed to through an intermediary, appears to be a rising trend. To explore this further, we asked respondents if they or anyone else in their organisation had directly briefed a barrister in Direct Barrister Briefings the previous 12 months. Although half of the respondents had not directly briefed barristers, 43% had briefed barristers, with 9% 9% 7% briefing more than six times in the previous 50% 12-month period. 34% None 1-5 times 6+ times Unsure Reasons for directly briefing a barrister varied, with the most popular response being to gain specialist expertise (78%), followed by this being a more cost effective (57%) and time efficient (40%) option. Briefing directly with a barrister was seen to be a way to get directly to the crux of a matter (32.08%). Other reasons barristers were contacted directly were due to existing personal relationships (19%), to ensure the organisations decision-making processes were enhanced (18%), to access quick advice (17%) and due to resource limitations (13%). Matters brought to barristers Governance/regulatory Other Unsure Industry-centric advice Organisation-centric advice Minor litigation Specialist advice Major litigation 1% 3% 3% 4% 9% 20% 25% 36% 0% 5% 10% 15% 20% 25% 30% 35% 40% Matters for which the respondents organisations mostly relied on for barrister s expertise were: major litigation supreme and federal court (36%); specialist advice such as taxation, human resources and intellectual property (25%); minor litigation tribunals, lower courts and small disputes (20%) specialist expertise regarding the organisation (9%) specialist expertise regarding the industry (4%); and governance/ regulatory matters (1%), were also noted. 7

Of interest, although barristers were directly briefed by almost half the organisations represented, when asked about intentions of briefing over the next 12 months, the responses were more

9 Of interest, although barristers were directly briefed by almost half the organisations represented, when asked about intentions of briefing over the next 12 months, the responses were more conservative. Forty-one of respondents believed there would be no need for barrister briefing; while 29% considered briefings would be required approximately one to five times and 5% predicted six or more times and 24% of respondents remained unsure of future briefing requirements with barristers. Legal Process Outsourcing The majority (75%) of respondents have not utilised legal process outsourcing (LPO). Of those who use LPO, 43% referred to it being due to resource limitations; 35% due to cost efficiencies; and 16% listed time efficiencies. LPO usage Never 74% Daily 4% Weekly 1% Monthly 4% Quarterly 7% Twice a year 6% Once a year 4% 0% 20% 40% 60% 80% When asked if LPO software will play an increasing role in their team s function over the next 12 months, 23% considered it would; 33% considered it would not; and 45% were unsure. NewLaw Business Models In the 2016 Trends survey we introduced the topic of NewLaw business models. At that time only 26% of respondents were familiar with such models. One year later, the landscape is different, yet not fully embraced. Although 35% of respondents had not used NewLaw business models in their organisations in the past 12 months, 40% reported utilising NewLaw models, with 10% canvassed using them more than 10 times over that period. The most popular form of NewLaw business models adopted were fixed fee firms (25%) and Use of NewLaw Models lawyer placement agencies (23%), followed by LPOs (12%) and virtual or dispersed law firms (9%). Hybrids (5%), legal project management services (4%), online document retailers (4%), managed legal support services and legal processing consulting services were utilised by fewer respondent organisations. 10% 2% 25% 28% 35% None 1-5 times 6-10 times 10+ times Unsure 8

10 LPO services utilised Legal procuess consulting services Managed legal support services Online document retailer firms Legal project management services Hybrids Virtual or dispersed law firms Legal process outsourcing Lawyer placement agencies Fixed fee firms 2% 3% 4% 4% 5% 9% 12% 23% 25% 0% 5% 10% 15% 20% 25% 30% Respondents were asked to list the two most significant reasons for choosing NewLaw firms. Reasons given varied from cost savings to improved flexibility and efficiency. Reasons for Choosing NewLaw Firms Greater choice of services 10% More efficient use of technology 11% Different fee models 25% Lower cost base 28% Improved value 40% Increased flexibility 44% Meets requirements at certain times 45% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% We also asked respondents to list the two most significant barriers associated with NewLaw firm usage. Reasons provided ranged from satisfaction with current law firms (34%) to lack of understanding and education in NewLaw options and concerns over quality of alternative services. Other reasons listed by respondents included: Challenges fitting in government procurement model. Our business is too unique/specific. Interested but have not had time to put business case together. No requirement. 9

11 Barriers to Choosing NewLaw Firms Not comfortable with the model Jurisdictional issues Confidentiality and security concerns Lack of time to build relationships in NewLaw firms Set up costs/time Quality concerns Unsure Lack of time to understand all the offerings Satisfied with current law firm relationships 3% 4% 7% 18% 18% 18% 26% 30% 34% 0% 5% 10% 15% 20% 25% 30% 35% 40% Legal Software New tools Continuing with the theme of innovation, we asked respondents if they had introduced new legal software tools in the past 12 months and 28% of respondents responded there had been new tools introduced to their team. Recurrent software tools listed include: Project management Matter management Template contracts Legal administration Dictation Research Document signing Case management Integrated platforms and databases Software Budget 30%+ 2% 20-30% 2% 10-20% 13% 1-10% 35% 0% 49% 0% 20% 40% 60% Budget One of the continual pressures for in-house legal counsel is budget. When asked how what percentage of the team s budget was allocated to software, the most common response was zero. 10

Anticipated improvements due to new legal software Matter management (69%) was the function viewed to be most significantly improved by legal software.

12 Anticipated improvements due to new legal software Matter management (69%) was the function viewed to be most significantly improved by legal software. Creating a paperless office (36%), project management (35%) and stakeholder communication (31%) were the next highest ranking perceived improvements. Of the respondents, 6% were unsure what improvements were possible with new legal software. Legal software improvements e-discovery 6% Managing external law firms/panels 19% Communication with stakeholders Project management Paperless office 31% 35% 36% Matter management 69% 0% 10% 20% 30% 40% 50% 60% 70% 80% Future Directions While technology and new billing methods press ahead in popularity for in-house lawyers, many issues remain stagnant. Budget, workload pressure and quality outputs under constrained time-frames remain a critical concern. Although the agile, innovative and disruptive nature of current business practices adds greater pressure to the in-house legal function, it also provides opportunities to streamline, outsource on an as-needed basis and create bespoke workflow management solutions. Flexibility and ingenuity appear to be key to moving forward. This report indicates these traits are required in employment, outsourcing and processing arrangements. Although alternative options are more readily available, there remains some lag in the uptake of potentially more effective ways of managing the in-house legal function. As we enter the final years of this decade, it shall be interesting to see how in-house legal departments further utilise trending initiatives to contend with the workflow and budget challenges. Your feedback on this report is welcome. Contact us at: Association of Corporate Counsel (ACC) Australia (toll free within Australia) OR ausmembership@acc.com PO Box 422, Collins Street West, Melbourne VIC 8007 AUSTRALIA 11

IN-HOUSE LEGAL ADVISERS TECHNOLOGY AND EFFICIENCIES

01 IN-HOUSE LEGAL ADVISERS TECHNOLOGY AND EFFICIENCIES 02 INTRODUCTION Over the past 10-15 years, it is estimated that the proportion of Australian legal professionals working in in-house roles has grown