Majority of Law Departments Look to AI as Managing Workloads Remains Top Challenge

Harbor Law Department Survey in collaboration with CLOC finds pronounced focus on cost control as more work shifts in-house

CHICAGO, Dec. 11, 2024 /PRNewswire/ -- Harbor, a leading provider of expert services to law firms, corporations, and their law departments, today announced the release of benchmarking data from its 21^st annual survey of corporate law departments, in collaboration with CLOC (Corporate Legal Operations Consortium). The 2024 Harbor Law Department Survey found that as 83% of departments anticipate continued growth in overall demand for legal services, managing the workload and bandwidth of internal resources is the top challenge identified by 63% of respondents. In addition, the adoption of AI has increased significantly, with 30% reporting that they have an AI tool currently implemented and in use, up from 18% in 2023, and 54% considering implementation in the next 1 to 2 years, up from 40% last year.

"The pressures faced by corporate law departments today are very real. With increasing concerns over costs, headcount remains unchanged for over half the respondents in our survey, leaving in-house teams contending with growing workloads," said Lauren Chung, survey editor and practice lead for Strategy + Transformation, Harbor. "Department leaders are asking what value technology can deliver over the next few years – from newer AI tools to upgrades of existing systems – and how they can better equip and support their teams so they can deliver on increased expectations for legal services delivery."

Since 2004, the Harbor Law Department Survey has gathered benchmarking data on legal spending, staffing, operations, and technology, providing both in-house leaders and their law firm counterparts with a holistic view of law department priorities and challenges. The 2024 survey of 186 law departments, the majority of which are in Fortune 500 companies, was conducted for the first time in collaboration with CLOC. Informed by CLOC's expertise, this edition features an expanded section on legal operations as well as AI trends.

Diverse strategies to handle demand

Law department hiring is expected to remain largely stagnant in 2024, following a period of growth between fiscal years 2022 and 2023, when 64% of departments grew. Among those with headcount increases, departments are choosing to hire more lawyers (42%) rather than support staff (27%) or operations staff (19%).

To handle increasing volumes of legal work, law departments are pursuing a range of strategies: increasing the workload of existing legal teams (39%); increasing their use of current technology (36%); re-engineering and/or standardizing work processes (36%); and investing in AI (21%).   

Evolving technology landscape

When it comes to technology use, the 2024 survey finds that while "new" AI tools are gaining momentum, a growing segment of law departments are also looking to change some of their core systems.

Approximately 30% of departments have an AI tool currently implemented and in use, up from 18% last year. In addition, 54% of departments are considering implementation of AI tools within the next 1 to 2 years, up from 40% the previous year. The top AI use cases cited in the survey include contract drafting and review; document drafting and review; and legal research.

Matter management/e-Billing has seen a notable increase in the number of law departments who are considering alternatives: 20% are planning to move to another tool or exploring other options, up from only 7% in 2022.

In addition, legal hold and contract lifecycle management (CLM) are also areas where law departments are considering alternatives to their existing systems: 20% of departments are moving to another tool or exploring other options for legal holds, while 18% of departments are doing the same for CLM.

Focus on cost control

The 2024 survey found an increasing focus on cost control, identified by 51% of respondents as a top challenge compared to just 41% in 2023. This comes as some 60% of departments expect an increase in their total legal spend in 2024, with 65% expecting an increase in in-house legal spend (up from 58% last year) and 58% expecting an increase in their outside counsel spend (up from 46% last year).

When it comes to outside counsel management, the top five initiatives departments have completed, or are in the process of revisiting/optimizing include:

• More consistent planning and budgeting, 84%
• Keeping more work in-house, 74%
• Tougher enforcement of outside billing guidelines, 73%
• Alternative fee arrangements (AFAs), 70%
• Structured annual rate review process, 65%

"The emphasis on cost control, particularly when it comes to outside counsel management, was pronounced in the 2024 survey," said Jaime Woltjen, senior director for Strategy + Transformation, Harbor. "Law firms that have a strong handle on project management, pricing and budgeting, and billing/e-Billing compliance are better positioned to provide predictability to their clients and adapt to what is becoming an increasingly competitive environment for outside counsel."

Global insights

"In a world of increasing demands and limited budgets, the ability to understand how your law department compares with peers is more important than ever," said Farrah Pepper, Vice President of CLOC. "This year's survey has been an exciting collaboration between Harbor and CLOC, bringing together Harbor's 20+ years of historical benchmarks and the extensive reach of CLOC's global membership. We look forward to unpacking further insights from this data in the coming months, and discussing key trends in various forums within the CLOC community."

In-depth benchmarking data from the 2024 Harbor Law Department Survey in collaboration with CLOC is available by industry, revenue, law department size, and geography in a dynamic online portal. Further information on gaining access to data relevant to your corporation or law firm is available at: https://connect.harborglobal.com/access-law-department-survey

About CLOC

CLOC (Corporate Legal Operations Consortium) is the only peer-driven association dedicated exclusively to legal operations. By legal ops, for legal ops, CLOC unites professionals, service providers, and stakeholders to drive innovation, establish standards, and transform the business and practice of law. CLOC is a 501(c)(6) non-profit professional association. www.cloc.org

About Harbor

Harbor is the preeminent provider of expert services to the legal industry encompassing strategy, technology, operations, and insights.

Our globally integrated team of over 800 strategists, technologists, and specialists navigates alongside our clients – leading law firms, corporations, and their law departments – to provide essential resources and invaluable insights.

Anchored in a rich heritage of deep knowledge, steadfast relationships, and mutual respect, our unwavering dedication lies in shaping the future of the legal industry, and fostering enduring partnerships within our community and ecosystem. www.harborglobal.com

SOURCE Harbor Global