Report Says Cost Control, Tech Innovation, and Metrics Key to Navigating Budget Constraints

According to the 2024 Legal Department Operations Index, produced by the Thomson Reuters Institute in collaboration with the Legal Value Network, corporate legal departments face rising matter volumes and pressures to improve workflows despite staffing and technology budget constraints.

Based on a survey of 80 legal operations professionals in the United States, the report identifies four key areas of focus: effective operations, cost efficiency, enterprise protection, and strategic growth. 

Controlling outside counsel costs remains the top challenge, with a 6% increase in respondents prioritizing this issue compared to the previous year. Additionally, legal teams aim to use technology to simplify workflows, enhance legal operations, and ensure data security. While 79% of respondents reported increased matter volumes, 58% indicated flat or declining budgets, and 67% noted stagnant or reduced attorney headcount.

Despite budget constraints, some departments are exploring tech upgrades by reallocating existing budgets rather than increasing overall spending. Although 36% of departments reported increased legal tech budgets, a larger proportion (57%) faced flat or shrinking budgets. 

The report also reveals that only 36% of respondents saw an increase in the percentage of work handled in-house, with 50% indicating that it had remained flat and 5% increasing their reliance on outside counsel. 

Metrics tracking in legal departments predominantly focuses on cost efficiency. The top metrics are forecasted versus actual spend, followed by total spend by law firm. Other valuable metrics, such as the quality of legal outcomes, are less commonly tracked but highly ranked by those using this metric.

Overall, the Thomson Reuters 2024 Legal Operations Index highlights in-house legal teams’ challenges and priorities, emphasizing the importance of cost control, technology adoption, and comprehensive metrics to help legal departments navigate budget constraints and enhance performance.