Legal Industry Trends 2021

General Counsel will experience many of the same trends in 2021 as before. Have they learned from the past?

I was extremely fortunate to hold dozens of formal discussions with General Counsel about their key challenges this year. Most admitted that 2020 was the hardest year of their careers as they navigated huge workloads, tighter budgets, remote working, rapid digitisation and emerging risks.

Many of these issues have been front of mind for GCs for years, but are now more widespread and intense than ever before. As this tumultuous year draws to a close, we’re questioning what next year holds.

The future is here - it’s just not evenly distributed yet.

The legal profession remains a cottage industry comprising various markets and cultures. Transformational trends over the last decade have elicited various responses from General Counsel, and this will continue into the new year. In 2021, some General Counsel will return to their offices, ignore the rapid advances of legal technology, and limit their supplier list to top-tier firms.

But it’s safe to say that this strategy is becoming marginalised. Across the tens of conversations I held this year, I found that GCs were familiar with the forces shaping their work. I believe that 2021 will see these trends cemented as the fundamental operating context against which legal departments make all their key decisions. To succeed in the new year, legal leaders must move from awareness, to deep understanding, and then to action.

So in this article we’re diving into the three key trends GC’s will navigate in 2021: the more for less pressure, the changing role of the GC, and the rise of legal technology. We’re asking: What exactly do these long-standing problems mean? How might that change in 2021? And what are we hearing from GCs facing these challenges from the front lines?

More for less

First, the decade-old ‘more for less’ pressure, heightened by the pandemic, will continue to underpin legal function strategy in the next 12 months. Many GCs predict flat or declining budgets in 2021, despite marked increases in the volume and complexity of their work.

This continuing squeeze will cause legal departments to intensify their search for savings and efficiency, making GC’s increasingly cognizant of the need to tighten financial reporting and show value for every dollar spent.

What’s new?

Three key factors, brought about by the COVID-19 crisis, have given new intensity to the more for less pressure:

1. As explored below, General Counsel are increasingly taking on more responsibility within their organisations. In order to deliver on these heightened expectations, GCs will need to build the case for greater investment in the legal function, in an environment where extra spend will be tightly controlled.
2. After 10 years of belt-tightening, many legal departments can no longer reduce costs or increase their hours. Many legal teams are stretched to the point of eroding the once-enviable distinction between private practice and in-house work hours.
3. There is little juice to squeeze from the law firm relationships GCs relied upon in the post-GFC years. Many BigLaw firms no longer have idle juniors to Second or fat margins to trim, leaving GCs to fight for more budget and/or create long-term efficiencies

Austerity and tradition are no longer the answer; it’s time to find alternative ways of working.

From the front lines

Many legal departments were punching above their weight before the frenetic cost-cutting of 2020. This year I met a high-performing sole regional counsel responsible for over $1.5 billion of annual contract value. Left alone to navigate a complex, international matrix organisation, this GC worked extremely long hours. Their requests for extra support went unanswered. Despite the significant risks posed by the plethora of complex deals that were closed without legal supervision, this GC was told there was just no more budget for legal support.

For many small legal teams like this one, the continuing demand to do more with the same or less resources means something has to give in 2021. The pressure is unsustainable.

So you might think that 2021 looks bleak for the legal teams hit hard by the challenges of 2020. But I beg to differ. The most creative, effective General Counsel in 2021 will be those who have already tightened their belts and put in the hours. With nowhere else to turn, these GCs will think hard about legal strategy, refocus on showing the value of the legal department, and thus convince stakeholders to invest in the legal team. As they say - never waste a crisis.

The New GC

The second key trend of 2021 is, in part, a response to the more for less pressure: the role of the GC will continue to shift from chief legal advisor to trusted business strategist.

GCs report spending less than half of their time on legal tasks, with the rest of their focus split between legal department strategy, risk mitigation, governance and other commercial issues. GCs (and their clients) increasingly view their role as part-business strategist, part-legal advisor, and must deliver solutions that add value to their organisations - especially as budget pressures mount.

What’s new?

There’s no doubt that 2020 supercharged the changing role of the General Counsel. One survey found that over 80% of GCs say the pandemic has impacted their role - and there’s no reason to think that will change next year.

Some GCs will see this as a burden. But most GC’s I spoke with recognised the opportunity to super-charge their careers by becoming invaluable to their organisation. They also saw the opportunity to finally eschew the ‘cost-centre’ badge and gain recognition as a vital strategic partner.

From the front lines

The pandemic has shown many corporate counsel that the role of the GC is almost infinitely expandable.

One GC told me that Monday the 16th of March was her first day sitting (virtually) on the executive of her organisation. And the firsts didn’t stop there. Her role expanded from Chief Legal Officer to, among other (unofficial titles):

• Health Officer - responsible for implementing health and safety measures and return to work plans;
• Head of HR - responsible for providing updates on employee rights, termination procedures and JobKeeper information;
• Custodian of Business Viability - responsible for ensuring her organisation remained viable throughout the pandemic, developing and overseeing business continuity plans and now a key daily contact for the CFO;
• Guardian of all things risk-related - This GC went from dabbling in the GDPR to being the go-to person for all concerns related to data, privacy, cybersecurity and managing security for remote employees.

Hopefully, greater responsibility will also come with greater power. This expanded, value-generating role of the GC is the path out of the more for less mess.

Legal Technology

The third key force shaping legal departments is legal technology.

The explosion of the legal technology market has left many in-house teams searching for guidance about best-practice strategies. Plus, rapid digitisation of many workflows throughout organisations in 2020 exposed those legal departments who turned away from the rapidly evolving legal tech landscape.

What’s new?

In 2021, GCs will have little time or resources to test vendors or develop a technology plan for the department - yet they face pressure from stakeholders, peers, and the industry to establish roadmaps and implement initiatives.

Though GCs themselves recognise that legal technology is an essential strategic element in their quest to build a better department, they are often unsure about the capabilities of legal technology, how it differs from other organisational tech (such as Office 365) and ill-equipped to devise a comprehensive legal technology roadmap.

In addition, many legal teams already have some technology in place, but few are maximising the value these systems provide. The end-to-end process of buying, implementing and getting value from legal technology remains a key challenge for General Counsel.

From the front lines

Many in-house departments have jumped on board the legal technology train. But not all are riding first class.

I spoke with tens of GCs who were on Day 1 of their legal technology journey. I heard of ‘knowledge management’ systems operated out of spreadsheets and contract management processes that involved locally saved folders (I know!).

I also met GCs who were skeptical whether technology could even help their practice. You can imagine my bewilderment when one GC at a major University told me ‘I don’t believe in that [legal tech]. Our work is too complex and bespoke.’ The close-mindedness in small sectors of the legal profession continues to surprise me.

On the flip side, I’m inspired by those willing to explore the benefits that legal tech might present, especially in slow-moving organisations. One General Counsel told me he capitalised on the opportunity Covid-19 presented to implement the first stage of this transformation agenda: digital signatures. He was pleasantly surprised when the elderly executive team embraced the new technology and touted the benefits. Even better, this GC proudly told me he executed an agreement on his iPhone while attending a family event.

Finally, those teams who have spent the last decade preparing their function for digital transformation are reaping the rewards - and will continue to do so into 2021. One of Plexus’ foundational clients, L’Oreal, hit a huge milestone in the legal technology journey in 2020: they have automated over 85% of their legal tasks. As a result, their legal team spends the vast majority of their time on interesting, value-generating work. Legal technology is certainly re-shaping their legal function - but it is driven by a well-loved legal team.

Over to you

The more for less pressure, the changing role of the General Counsel, and legal technology, will continue to be the three key trends reshaping legal departments in 2021. The pandemic has not only heightened these trends, it has cemented their importance within legal function strategy.

While legal teams are at various stages in developing and implementing their responses to these challenges, one thing is consistent across the board: the legal function is changing. GCs face mounting pressure to improve the way they do business.

Those legal leaders who deeply understand these key challenges and quickly implement initiatives to respond will be the most successful in the new year.