16th annual legal department operations survey results

The 2023 law department operations survey revealed that 52.3 percent of legal operations professionals reported that their organization added its first dedicated LDO profession in 2018 or later. Today, just 17.9 percent of legal operations professionals expect their team to grow. This signals a turning point for LDO teams, who can now turn their attention from growth to strategy and measurement.

The rapid growth of legal department operations teams realized since 2018 has altered the breakdown of workload and responsibilities within law departments. The legal operations function has moved from being a secondary responsibility for practicing lawyers to a dedicated, independent body of work owned by LDO professionals. This year, only 21 percent of respondents said that they serve as in-house counsel in addition to their operations responsibilities.

Despite this consistent growth, LDO professionals have predominately focused on managing the law department's processes and expenditures. Commonly, legal operations teams prioritize traditional functions such as reporting, analytics, billing, invoice approval, financial analysis, and technology procurement. These functions align with the historical priority in legal operations: budget control. Key performance indicators for LDO professionals have traditionally revolved around budget-related metrics, with less emphasis on performance and value tracking. Most survey respondents (93.9 percent) indicated that they track external spending, while only 30.6 percent monitor the performance of law firms and alternative legal service providers. Just 24.5 percent of respondents track their value.

As the rapid growth phase subsides, general counsel appears to be pulling back their support for legal operations. Only 72.9 percent of legal operations professionals now claim to receive adequate support, a notable decrease from 88.9 percent last year. Whether it's a challenge for legal operations teams to deliver value without ample support or a response to perceived inadequacies, there's an opportunity to regain support by showcasing capabilities beyond budget management and reporting.

Findings from the 15th Annual Law Department Operations Survey (published in 2022) suggested that the legal operations function could enhance its influence within the enterprise by maximizing value from contract lifecycle management tools. However, only 55.4 percent of respondents in the 2023 survey mentioned managing their organization's contracts. Furthermore, LDO professionals noted that contract management tools ranked among the least effective in their tech arsenal, with legal spend management and e-billing tools topping the list.

The mediocre scores survey respondents gave to contracting technology suggest that LDO teams should not only reevaluate the effectiveness of these technologies but also redefine and strategically measure the value of contracts. Today, LDO teams primarily evaluate contracts based on turnaround time, a singular aspect of their overall value. Contract management mirrors the broader challenge in legal operations. LDO functions possess the potential to deliver substantial value, but defining "value" remains a complex task.