Corporate Law Departments in Australia Face Pressure, Need to Focus on Value, New Report Says

Topics: Australia, Client Relations, Corporate Legal, Data Analytics, Efficiency, Leadership, Legal Innovation, Thomson Reuters, Value-add


Corporate law departments in Australia are realizing that this year may become one fraught with risk, elevated expectations, reduced resources and a strict need to focus on bringing value as an in-house legal department.

Following the Australian government’s Royal Commission examination into misconduct in banking and other financial sectors, plus new changes to whistleblower protection laws, organizations are finding themselves on the defensive. Indeed, these two regulatory events have become key motivators for organizations to look inward and establish strong self-regulation in order to rid themselves of any hints of unethical corporate behavior.

The mood in Australia also is weighed down further by general global economic uncertainty, which carries with it the pressure to mitigate litigation risks, corporate budget cuts, further corporate restructuring, and the strong push to remain commercially viable in today’s market. No surprise then that corporate in-house legal departments in Australia are feeling a lot of that pressure roll down the hill toward them.

A newly published report — the State of Australian Corporate Law Departments 2019, from Thomson Reuters and U.K. legal research firm Acritas — explores some of these themes that are forcefully impacting the Australian corporate law department’s role both within their parent organization and in today’s changing legal environment.

Among the key factors that could impact Australian GCs that were identified in the report include:

Financial constraints: Corporate law departments and their in-house lawyers and staff are expected to bear the brunt of deeper budget cuts over the next 12 months, the report noted. In fact, legal spend is projected to decrease in Australia at a greater rate than the global average and among corporate law departments in the U.S. and China.

You can download the full report, the “State of Australian Corporate Law Departments 2019”, here.

Focus on value: As a result of this budget tightening, more Australian legal departments are likely to elevate the consideration of the value proposition of outside legal suppliers and looking to the value-add as a key component of their selection criteria. Further, as Australian corporations demand a more strategic, proactive approach from their in-house legal departments, General Counsel in turn are going to be expecting more from their outside counsel and other legal service suppliers.

Corporate law departments will keep commercial and strategic thinking top of mind as they seek to improve their own efficiency, value, and performance. As a large part of that, strategic-minded legal departments will seek outside legal providers that best demonstrate that they understand the true nature of the organization’s business and are able to respond with solutions to legal and business problems that show commercial acumen and strategic thinking.

Innovation push: As a further result of continued budget cuts, General Counsel are increasingly seeking new and innovative ways to manage and deliver their legal work, according to the report, which showed that 48% of GC surveyed are introducing innovative solutions to drive efficiencies and more effective working practices. These GCs also expect the same innovation-driven mindset among their legal suppliers, but the survey showed that just 37% of General Counsel feel their legal providers are modern and innovative enough for today’s legal environment.

Adopting legal technology: However, even with this innovation-driven mindset, the adoption rate of legal technologies to support such needed innovations as automation and process improvement among Australian in-house legal teams is relatively low compared to other major legal markets, the report shows. As the pressure from parent corporations continue to rachet up, in-house legal departments will have to commit to a high level technology usage if they are to meet their goals in efficiency, process improvement and delivery of value.

Need for global market outlook: While the report shows that 38% of foreign multinationals have legal needs in Australia and 71% of Australian organizations have a need for advice outside of the country, corporate law departments and their outside counsel firms increasingly need to be able to support these global needs with a strategic and well-planned approach.

These and other challenges are what are facing Australian corporate law departments in the coming year, and many of these are expected to possibly increase in the future, according to the report. However, with the right tools, strategic planning, and quality outside assistance, General Counsel and their in-house legal team can rise up to meet these challenges and seek to drive greater value within their own department and to the corporation as a whole.

Toward that end, this report includes a legal department toolkit that is based on recommended performance metrics and best practices for those GCs looking to accelerate their legal teams’ in-house performance in 2019. The toolkit features ways to create metrics-based performance improvement, review technology processes and efficiencies, and address what may be stopping your department from developing truly collaborative relationships.

Corporate legal departments should draw on the direction and insights found in this report to improve their value to their corporation, and further maintain their organization’s resilience and commercial viability for years to come.