The 2024 State of the Corporate Law Department report from Thomson Reuters Institute was based on proprietary data and comprehensive research, involving over 4,500 interviews and surveys with C-level executives, General Counsels (GCs), in-house legal teams, and professionals in corporate legal operations and risk & compliance. Additional insights were integrated from surveys of over 360 in-house tax professionals, conducted throughout 2023.

Key Findings from the Report:

• 91% of in-house legal professionals expect basic AI training to be mandatory within 5 years.
• 69% of General Counsels globally face moderate to significant cost pressure.
• 72% focus on efficient processes, with 67% seeking discounts on rates.
• 76% believe AI can improve efficiency, while 72% prioritize technology to simplify workflows.
• Median legal spend as a percentage of revenue varies by region and industry size, with the U.S. and Financial Institutions having higher spends.
• 47% to 56% of total legal spend is internal, depending on the region.
• 22% of work is moving in-house, notably in contracts, with 39% moving to lower-cost providers in litigation.
• 71% prioritize identifying and mitigating emerging risks, and 58% focus on upcoming regulation changes.
• 44% see AI aiding in risk management goals.

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Given the rapid and dynamic evolution in today's business environments, corporate legal departments need organizational growth and risk management. According to report, corporate legal departments are aligned in their efforts across four key areas.

These areas include effective advising, operational efficiency, business enablement, and risk management. Here is a breakdown into each category and how corporate attorneys are continuously evolving in their strategies.

1. Advising the Business Effectively

The number one pivotal role of corporate lawyers is effective advising on business matters. Some of these areas include compliance and risk mitigation. Thomson Reuters Institute reported 67% of General Counsels believe generative artificial intelligence (Gen AI) will significantly impact the practice of law.

This statistic shows the increasing reliance on advanced tech to streamline legal processes. Additionally, the report indicates a need for legal professionals to update their technology skills in order to stay on top of emerging legal challenges.

2. Operational Efficiency

When it comes to corporate legal departments, operational efficiency is a cornerstone for any organization seeking to optimize resources and productivity. The Thomson Reuters Institute report finds that 72% of legal departments are focused on building efficient in-house workflows and optimizing external counsel engagements.

All this, paired with advancements in data analysis and AI legal teams, can efficiently streamline litigation processes, contract management, and documentation review. There is also a clear shift towards selective engagement of external counsel, aligning specific legal expertise with organizational needs to achieve operational efficiencies while controlling costs.

3. Enabling Business Growth

Today’s corporate legal departments are increasingly focused on enabling the strategic growth of their companies rather than just mitigating legal risks. General Counsels and their teams are taking on more of an advisory role, helping the C-Suite shape business strategy and decisions.

By gaining a deep understanding of the company's strategic priorities and growth initiatives, legal departments can provide tailored guidance to help the business pursue new opportunities efficiently and effectively.

Legal departments are also directly enabling growth by identifying commercial opportunities. By embedding themselves in the flow of business, departments can develop the perspective and judgment to spot these opportunities.

4. Protecting From Risk

With data breaches now commonplace, companies are under intense pressure to protect personal information. Strict laws like Europe's General Data Protection Regulation (GDPR) impose heavy fines for violations.

Legal departments are helping companies implement comprehensive data privacy programs to detect and prevent breaches, ensure compliance, and respond quickly if one occurs.

Other areas of risk include compliance failures in a complex regulatory environment, intellectual property theft, workplace issues like harassment or discrimination, and product liability or safety concerns.

The 2024 report found that General Counsels expects their spending on outside counsel to increase, in part to help manage these risks.

Moving From Cost Centers to Value Centers

As in-house legal departments work to improve their key areas of focus, they are also seeking to evolve how they are perceived within their organizations. Rather than being viewed primarily as cost centers, many corporate legal officers are working to redefine their departments as value centers that can provide strategic leadership

To achieve this, legal department leaders must balance progress in their key areas of responsibility — advising the business, performing legal functions efficiently, enabling business growth, and mitigating risk — while also shifting how they communicate the value of their contributions.

Aligning With C-Suite Expectations

Aligning legal department operations and messaging with C-Suite expectations is crucial for corporate lawyers looking to evolve into strategic leaders within their companies. According to the Thomson Reuters Institute's report, C-Suite executives have clear views on how they want to see legal departments focus their efforts over the coming years.

For legal departments to effectively partner with company leadership, General Counsels and their teams must understand leadership's key priorities and work to align their operations and communications accordingly.

Focusing on this effort helps to shift perceptions of an in-house team from being purely a cost center to a strategic asset for the company. As corporate legal departments evolve into strategic business partners, their value and influence within organizations will continue to grow.

The report details the focus of General Counsels and C-Suite professionals on the future direction of corporate legal departments. It goes into depth on legal professionals' views on current trends and their potential impact on the legal sector over the next five years.