Contract management software tops legal departments’ tech spend priority list, study finds

Spending on compliance and legal research services took second and third place, respectively

Contract management software tops legal departments’ tech spend priority list, study finds

Contract management software tops the priority list of in-house legal departments when it comes to spending on tech, revealed a study conducted by the Association of Corporate Counsel (ACC).

The organisation’s 2021 Law Department Management Benchmarking Report, which was published in partnership with global legal search firm Major, Lindsey & Africa, showed that of the 493 legal departments surveyed across 30 countries, 42% had nominated contract management tech as being among the top three areas of legaltech they invested the most in. Spending on compliance (15%) and legal research services (10%) took second and third place, respectively.

The survey results indicated that for 84% of the respondents, the function of compliance fell within their remit. The study noted with interest that 21% of the respondents supervised their organisations’ human resources function.

The study also noted that legal spend distribution among the respondents was almost evenly split; the median values for internal spend comprised 49% of total spend, while the values of external spend made up 51%. Moreover, the report authors pointed out that “smaller organisations tend to spend more inside while medium and larger organisations spend more outside” – 53% of small organisations spent more internally on areas like lawyer and non-lawyer compensation, while 57.6% of medium-sized organisations and 54.7% of large organisations prioritised external spend, including areas like outside counsel and ALSPs.

Small organisations with a revenue of less than US$1bn established legal departments composed of a median of two lawyers and three legal staff in total, while medium-sized organisations had a median of nine lawyers, two paralegals and one administrative staff. Large organisations with a revenue of more than US$10bn cultivated legal departments comprising a median of 70 lawyers, 11 paralegals, four legal operations professionals, seven administrative staff, eight other specialised staff and three contract or temporary staff.

Overall, in terms of mean composition, a legal department is generally made up of 66% lawyers, 12% paralegals, 6% legal operations professionals, 8% administrative staff and 8% other staff, the study revealed. Nearly half of the respondents (46.9%) reported that they have a formal strategy to bolster diversity in their departments.

Among all respondents, 29% said that they had metrics in place to monitor internal diversity. A whopping 71% of large organisations had implemented such metrics, but only 16% of small organisations had done so.

Nonetheless, a legal department’s value to an organisation was highlighted in the study’s finding that for 80% of the respondents, their CLO had a direct line to the organisation’s CEO – notably, 92% of the CLOs of large organisations enjoyed this privilege. The ACC noted that this has been a consistent trend. Canadian organisations led the pack globally, with 86% of their CLOs reporting directly to the chief exec. In addition, CLOs serve as their organisations’ corporate secretary for 63% of respondents.

The 2021 Law Department Management Benchmarking Report highlights the emerging trends in legal department management worldwide in light of the international emergence from COVID-19. The respondents operate across 24 industries.

The report data were collated from March 2021 to May 2021.

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