Evolving Regulatory Requirements Pose the Biggest Challenge for Law Departments in 2016, Consilio Survey Finds

WASHINGTON--()--According to Consilio’s Law Department Benchmarking Report, which was released today, over 50 percent of law departments find that increasing or changing regulatory requirements pose the biggest challenge in 2016. The sixth annual survey aims to help general counsel (GCs) better understand the effectiveness of their operating processes and was conducted in partnership with The General Counsel Forum.

Managing Internal and External Information Risk

Many of the regulatory issues companies currently face relate to data privacy and cybersecurity concerns. While 58 percent of law departments have an internal data-privacy program, just 21 percent take the same precautions with information shared externally when managing vendors, according to a survey by Consilio. The lack of risk-assessment programs makes sensitive data vulnerable to hacking and other cyber threats

“As security concerns become more commonplace, law departments are working to ensure proper data security measures are implemented to protect sensitive company information both internally and externally,” said Bret Baccus, managing director, Consilio. “We’re seeing more companies use objective, metrics-based measurements to assess outside counsel and other providers’ security capabilities. Those metrics are being used to select third-party vendors based on the risk level in sharing confidential information and data.”

In fact, companies in all industries cited increasing or changing regulation as one of their top three concerns for the year ahead, and over 60 percent of technology and healthcare respondents cited data privacy and information security challenges as a top concern.

“It is not surprising that today’s evolving regulatory environment was cited as the biggest challenge for law departments in the year ahead,” said Laurie Fischer, managing director, Consilio. “Especially in light of ongoing changes to the European Union's increasingly tough privacy regulations, this is an area that will continue to impact spending for corporate law departments whose companies have a presence outside the U.S.”

Running the Law Department as a Business

Another highlight of Consilio’s survey supports the trend that more law departments are running internal operations as a business unit, with larger companies employing a dedicated law department operations manager who guides operational, financial, technical, and process support.

According to Consilio’s survey, 89 percent of companies with over $10 billion in revenue reported employing a dedicated law department operations manager.

“The position of operations director continues to evolve to a true executive level position in law departments across all industries,” said Baccus. “Operations directors are guiding spending decisions, interacting with senior-level executives in other internal functions, and relieving operational oversight responsibilities from the general counsel, allowing them to focus on practicing law.”

Spend Management Still Remains Top of Mind

The survey also found that law departments are still focused on managing budget and operations:

  • Increase in Spending: According to surveyed law departments, spending continued to increase, although at a lower rate than the prior year – at 1.7 percent from 2014 to 2015 as compared to an increase of 2.2 percent from 2013 to 2014.
  • Outside Counsel Management: As costs continue to increase, law departments are becoming more sophisticated in their management of spending, with 67 percent of respondents using matter-level budgets and 74 percent having, or planning to implement, structured programs for conducting rate negotiations. A majority (57 percent) reported having preferred provider programs for outside counsel and using a relatively small number of firms (a median of 8 across all respondents) for 80 percent of their work.
  • Discovery Task Outsourcing: As law departments look to effectively manage costs and workloads, many are more often outsourcing discovery work to non-law firm vendors. Over 75 percent of companies with over $10 billion in revenue reported using alternative service providers for document review and data processing/hosting, with 44 percent of companies between $2 and $10 billion reporting the same.

The 2015 Law Department Benchmarking Report encompasses data collected from 119 companies of varying size and industry. Unless otherwise noted, all quantitative questions pertain to fiscal year 2014 data and all qualitative questions gauge more generally the ongoing practices of the law department. The highlights of the Law Department Benchmarking Report are available for download at http://consilio.com/benchmarkreport.

About Consilio

Consilio, a Shamrock Capital Advisors company, is one of the largest global eDiscovery and document review services providers, with extensive experience in litigation and antitrust matters and internal and regulatory investigations. Recently joined with Huron Legal and Proven Legal Technologies, Consilio supports law firms and corporations with innovative software and cost-effective, end-to-end litigation services that include eDiscovery, document review, information governance and compliance, law department management, contract management and legal analytics. ISO 27001 and Safe Harbor certified, the company can deploy its services rapidly and efficiently to clients anywhere in the world from offices and data centers in North America, Europe and Asia. For more information, please visit www.consilio.com.

Contacts

For Consilio
Gabrielle Simon, 203-254-1300 ext. 108
gsimon@prosek.com

Release Summary

According to Consilio’s Law Department Benchmarking Report, released today, over 50 percent of law departments find that increasing regulatory requirements pose the biggest challenge in 2016.

Contacts

For Consilio
Gabrielle Simon, 203-254-1300 ext. 108
gsimon@prosek.com