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Bloomberg Law Analysis

ANALYSIS: Tech Expectations Are Rising. Evaluations? Not So Much

Nov. 16, 2020, 11:01 AM

For law firms looking to be outside counsel for corporations, expectations are high for increasing use of legal technology to be more efficient. And in fact, law firms have demonstrated increased efficiencies due to technology over the past 18 months. That’s great, except that most companies don’t even have explicit technology usage requirements, let alone formal evaluation procedures.

This gives law firms room to step up and define what the efficient use of technology means. Bottom line for firms? Use the tech, be efficient — but don’t expect legal departments to know how to hold you to it.

Everyone Wants More Technology Use by Firms

One of the main goals of legal technology is to create efficiencies. This means that technology is implemented to reduce waste in workflows, so employees can accomplish more in the same amount of (or, ideally, less) time. Other goals may be articulated, such as reducing human error, reducing the number of applications needed to accomplish a task, or increasing interoperability between systems, but all of these also have the ability to reduce the amount of time required to complete a task.

According to Bloomberg Law’s 2020 Legal Technology Survey results, more than three-quarters of respondents overall agree that outside counsel are expected to increase their use of legal technology in order to provide legal services more efficiently. And over the past 18 months (and three surveys), we’ve seen a growing number of law firms affirm that they have seen increased efficiency due to their use of legal technology.

The Barrier: Knowing When Tech Aids Efficiency

Increased efficiency in outside legal services as a goal is clear, and increased technology use as one means for accomplishing that goal is agreed upon and demonstrated. However, without metrics to track how much — or even whether — a technology is improving workflows, organizations are hard pressed to determine the value of their legal technology.

While expectations for use of legal technology increase, legal departments aren’t effectively measuring success when it comes to technology efficiencies. In fact, the majority of in-house respondents said they have no formal way to measure the value of their legal technology. However, even without a formal value measurement, just over half of in-house respondents said they determine the value of the legal technology they use by measuring savings in attorney time and budget dollars.

Few In-House Dictates on Firms’ Tech Use

With legal departments still struggling to measure the value of their own technology, it would be unrealistic for them to measure the tech used by their outside counsel. Ideally, though, clients could ensure that appropriate technology is being used by outside counsel through the use of requirements or guidelines. But this approach is not being widely used.

Over one-third of in-house respondents said that their legal department has no requirements regarding outside counsel’s use of technology, and almost one-quarter are not sure whether their department has any such requirements.

Of those in-house departments that do have requirements for technology use by their outside counsel, the most popular are guidelines for how outside counsel use technology and mandates that outside counsel use certain types of legal tech. In practice, this could mean anything, such as requiring outside counsel to use a specific billing or document review platform because it’s compatible with what the legal department is already using, demanding that some e-Discovery platform be used for document collections of an identified minimum size, or requiring the implementation of minimum security practices. But even these requirements were each used by fewer than one-quarter of all in-house respondents.

Larger legal departments are more likely to have at least some requirements relating to outside counsel technology use in place. Only 24% of respondents from corporations with more than 50 attorneys said they have no requirements, compared with almost half of respondents from smaller companies. So law firms can expect a few more of the aforementioned guidelines when working as outside counsel for larger establishments.

Notably, few (15%) surveyed legal department lawyers said they require outside counsel to discuss with them the legal technologies they plan to use. This raises numerous concerns about whether in-house counsel are adequately managing issues around their information and data privacy, security, and confidentiality. When asked how well they understand the underlying technology used in their daily workflows, about four out of 10 in-house respondents said “Not well.” As with determining the value of legal technologies, if legal departments are not well versed in their own technology, it makes sense that they would not be pressing their outside counsel to discuss technology usage decisions.

Requirements Unlikely to Increase Soon

Overall, only one out of 10 respondents from in-house legal departments said their organization plans to require more details on its outside counsel’s use of legal technology before mid-2021. As for the rest of the respondents, half said their department has no such plans and half said they are unsure of their department’s plan. So concerns about data security and confidentiality will persist.

While legal technology is seen as important to increasing efficiency in outside counsel services, survey responses indicate that controlling, monitoring, and measuring legal technology use by firms is not viewed by in-house departments as central to meeting their efficiency goals. This is true today, and is expected to remain true next year.

Access additional analyses from our Bloomberg Law 2021 series here, including pieces covering trends in Litigation, Transactions & Markets, the Future of the Legal Industry, and ESG.

Bloomberg Law subscribers can find related content on our In Focus: Legal Operations and In Focus: Legal Technology resources.

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