Three Trends Driving How Corporate Legal Departments are Adapting to COVID-19

As an alternative legal service provider (ALSP)  that works with corporate clients across the country and around the world, Lexitas has a unique perch from which to observe—and in many cases participate in—the transformation of corporate legal departments in response to the COVID-19 pandemic. The sustained surge in infections around the world, and particularly in the United States, has hardened the resolve of most that fundamental change is required, not interim measures in hopes of a return to the pre-pandemic status quo.

COVID-19 is an Accelerant of Existing Trends

In 1972, evolutionary scientists Stephen Jay Gould and Niles Eldrege developed a theory called “punctuated equilibrium.” It stands for the proposition that, in nature, long periods of incremental change occur until a significant disruption shatters the status quo. It’s an apt analogy for what COVID-19 has wrought in the legal services industry. The pandemic has forced the industry to greatly accelerate the pace of change. Trends that were expected to play out over the course of years are now upon us—and corporate legal departments are taking action to adjust to the new equilibrium in order to get legal work done.

Through our work with clients, we have observed three trends, in particular, that are catalyzing how corporate legal departments are adapting to COVID-19:

• Remote work is the new reality, which means that corporate legal departments are seeking out the best talent regardless of geographical location
• Reorganizations, layoffs, and furloughs affecting corporate legal departments mean that workers need to be more nimble and flexible
• The acceleration of trends is requiring leaders to accelerate decision-making and execution in order to realize ROI

Remote Work is the New Reality

Before COVID-19, we presumed that almost every staffing request we received from a corporate client would involve on-site work for the client. In the last few months, that presumption has been flipped—remote work is the new reality. 

The “grand experiment” in remote work has demonstrated to corporate law department leaders that workers don’t need to be physically gathered under a single roof to perform effectively. At the beginning of the pandemic, it was widely assumed that once stay-at-home orders were eased, workers would return to corporate offices. Evidence that distributed workforces are fully capable of getting the job done is leading businesses to fundamentally rethink the notion of a corporate office. Why invest the time and resources to reconfigure office spaces and increase the risk of exposure when productivity isn’t being impacted?

One of the primary benefits being realized by those who are more fully embracing a distributed workforce is that they have a much broader and deeper pool of talent to draw upon. When the quality of work—not the location of where work is done—becomes the number one priority, corporate legal departments exponentially increase their ability to find the right person for the job.

A More Flexible Future

A recent article in The Wall Street Journal described how U.S. companies, many of whom were banking on a quick rebound from COVID-19, are now shifting their strategies and staffing to adjust to the “coronavirus’ permanent impact on demand.” For corporate legal departments, strategic shifts include an acceleration of the unbundling of legal services, often involving the dissemination of legal work to a supply chain of legal services providers, including law firms, ALSPs, and in-house talent.

Because in-house legal departments are, like the rest of their organizations, being impacted by reorganizations, layoffs, and furloughs, as well as more general budget cuts, they are being forced to do more with less.

What this means, in practical terms, is that in-house attorneys and support staff are having to adapt and become more nimble and flexible in order to get legal work done. A greater emphasis is being placed on legal operations, controlling costs, prioritization of key initiatives, and project management. Every decision being made by in-house teams must be viewed through the lens of whether it is likely to deliver maximum value to the organization—which was always a priority but is a particularly important concern in the COVID-19 environment. In many cases, this means that in-house teams are looking to outside resources, from law firms to ALSPs to individual contractors, to take on specific initiatives. This allows in-house professionals to be better utilized and focus on what they do best.

Execution at a Rapid Pace

During a recent discussion with a client, the issue of controlling legal costs arose. What was interesting about the conversation was not the subject matter—corporate legal departments have been discussing the imperative of lowering the cost of outside legal spending for years. Rather, what was remarkable was the fact that the client, armed with years’ worth of legal spend analytics, intended to make substantive changes to spending that would have a substantial impact on the bottom line by year’s end. 

Prior to COVID-19, companies might spend years collecting data, and years more analyzing the data, before taking action, if at all, to affect change. Now, there is a heightened sense of urgency to identify opportunities for improvement and accelerate the implementation of it. Our clients are systematically reviewing their systems and processes and looking for ways, from reducing spending to optimizing commercial contracting practices, to enhance their operations. As the punctuated equilibrium theory would predict, the urgency of the moment has truly shattered the status quo in the legal services industry. We are seeing our clients move faster and think more strategically than ever before. And we are proud to play a role in the transformative steps they are taking to meet the moment we are in and emerge stronger on the other side of the crisis.