Law departments react to pandemic disruption

Sixty-six percent of chief legal officers report that their organization’s revenue is down this year in response to the COVID-19 pandemic, and 77% say their law department’s workload is up according to Altman Weil’s 2020 Chief Legal Officer Survey.

“These pandemic-driven dynamics accelerate the law department’s perennial problem of doing more with less,” says Altman Weil principal and survey author James Wilber. “But they may also create a new level of urgency and focus to make hard choices about law department staffing, spending, efficiency and resource allocation.”

Highlights from the 2020 survey:

• COVID-19 impact: 66% of chief legal officers report that their organization’s revenue is down due to the COVID crisis; 77% of law departments have experienced an increase in workload, including 25% in which workload is up significantly.

• Pandemic layoffs: In response to the pandemic, 8% of law departments laid off paralegals, 7% of departments laid off support staff and 4% laid off staff lawyers. In the coming year CLOs plan to scale back further on non-lawyer positions.

• 2021 budgets: 44% of CLOs plan to cut 2021 overall expenditures and 39% plan increases – the first time in ten years that more law department budgets will shrink than grow.

• Vendor spend: More law departments made cuts to non-law-firm vendor spending in 2020 than at any time in the last 10 years – up from 9% in 2019 to 18% this year. 25% of law departments will reduce vendor spend in 2021.

• Law firm discounts: The median discount on standard hourly billing rates was 10% in 2020; in light of COVID-19, 33% of law departments also asked for additional discounts from law firms.

• Working from home: 77% of CLOs believe that remote work options for department lawyers and staff will be a permanent change post-pandemic.

“We narrowed the survey’s scope this year to focus on the ramifications of the COVID-19 crisis,” explains Wilber. “We found CLOs pulling back on spending where possible and cutting some personnel while largely protecting their workforce talent. Legal operations managers stepped up to guide their departments through the logistical challenges, root out areas of waste and make needed resource reallocations.”

The Chief Legal Officer Survey has been conducted and published annually by Altman Weil since 2000, most recently in September and October 2020. One hundred nineteen responses were received for the 2020 survey, 12% of the 966 corporate law departments invited to participate. Survey topics include: law department staffing, spending, efficiency, cost control, and the Chief Legal Officer and Legal Operations Manager roles.