3 Reasons Why GCs Should Take Advantage of Dynamic Legal Forecasting
By Axiom Law
As legal leaders, GCs are well versed in navigating budgeting season, despite the unique challenges presented over the past few years. But amid increased budget cuts, an inflationary economy, and a looming recession, the annual budgeting exercise simply isn’t enough anymore.
“Our budgets were slashed in 2021 and again for 2022. We have more work than we’ve ever had,” shared one GC of a Fortune 500 firm, when asked about the challenges their department is facing. And these challenges are not unique.
Dynamic legal forecasting is imperative for GCs, as, unlike budgeting, it allows them to continuously deal with the issues their department is facing in real time.
Here are three reasons why forecasting is a critical component of managing a legal department and why GCs should be taking advantage of dynamic legal forecasting right now.
Dynamic legal forecasting helps GCs better address their current pain points
Despite the many hours spent carefully crafting a legal department budget, unanticipated pain points inevitably arise throughout the year, often well after budgeting season has wrapped up. In other words, department pain points may actually be quite different from those that were assumed when creating or finalizing the legal department budget.
For example, legal departments across the country are grappling with emerging risks and uncertainty while needing to do more with decreased budgets. Today’s marketplace is compromised by supply chain issues, geopolitical disruptions, and contractual delays, which means many legal departments need lawyers who are well versed in supply chain oversight. And many didn’t anticipate this need while they were budgeting.
Another example is data privacy: various states across the U.S. are in the process of adopting their own data privacy regulations. In-house teams are now dealing with these legislative updates and variances in addition to trying to meet the December 2022 GDPR deadline to avoid fines and a tarnished public perception. While legal departments were aware of the GDPR deadline to replace their standard contractual clauses, state-by-state legislative updates aren’t as easy to anticipate.
And these are just a couple of the quickly emerging and evolving pain points today’s legal departments are facing. GCs must move at an accelerated pace and work to avoid unnecessary law firm costs, at a time when hiring and retaining talent has never been more difficult. For these reasons, dynamic legal forecasting is essential to both help GCs better understand the pain points their department is experiencing and allow them to better solve them.
Forecasting can help in-house leaders hedge against hiring and retention issues
There’s an acute war for talent happening in the legal industry, and as mentioned above, hiring and retaining talent has never been more difficult. In an age widely referred to as the “Great Resignation,” or as Axiom calls it, the “Great Reflection,” lawyers are leaving their jobs at an unprecedented pace.
In a recent webinar, Laura Yens, Senior Client Advisor at Axiom, shared how a client’s attrition rate, which has historically been around 3 percent, jumped to 20 percent in 2021. This increased attrition is not unique to Yens’s client; 64 percent of managers expect voluntary turnover to remain elevated or increase, according to McKinsey & Company.
Under typical circumstances, it takes about six weeks to hire for a legal position, and this number jumps to 11 weeks for managerial-level positions. However, GCs aren’t dealing with typical circumstances; they’re dealing with an acute war for talent, and filling an open legal position is taking longer than ever before.
Here’s where dynamic legal forecasting comes in: it allows GCs to reexamine and be more flexible with their hiring spend. For example, it empowers GCs to reimagine the cost of an in-house lawyer as a bucket of additional budget. That budget may be used more efficiently on a single, on-demand lawyer than it can be on a permanent, in-house hire or law firm, or it may be more effectively deployed across multiple on-demand lawyers to address numerous matters and specialty needs. Dynamic reforecasting enables legal departments to employ a more agile approach to hiring as unexpected risks arise. This also allows GCs to further cut costs by limiting the work that needs to be sent to law firms.
Forecasting allows GCs to pivot when necessary
The past few years have been an exercise in flexibility for the majority of GCs. Unprecedented and unanticipated legal issues have emerged and will continue to emerge suddenly. But unfortunately, most in-house legal departments are so overburdened by their routine, day-to-day work, they don’t possess the speed or agility it takes to address them. Because most of the issues legal departments face are both fluctuating and unpredictable, GCs need to be flexible enough to pivot with their spend when necessary, in order to find the right lawyer to best address what may be a nuanced specialty area of the law. Dynamic legal forecasting makes in-the-moment spend redirection, enhanced risk mitigation, better matter mapping, and informed attorney hiring not only possible, but probable.
Legal department budgeting can be overwhelming, but dynamic legal forecasting doesn’t have to be. In fact, if done correctly, it should help to alleviate some of the stress GCs are currently facing and address some of their most burdensome pain points.
Learn more about legal forecasting and how to implement agility-based modeling in Axiom’s step-by-step forecasting playbook, Why Annual Financial Budgeting Isn’t Enough Anymore: The How, What, and When of Legal Forecasting.
Why Annual Budgeting Isn’t Enough Anymore: The How, What, and When of Legal Forecasting* Required
How Axiom IP lawyer Elayna Pham builds relationships and leverages two decades of experience to serve her clients.
The broad scope of the LIBOR transition calls for clear protocol and specialized financial and regulatory knowledge.
Axiom lawyer Charles Green advises clients in the financial services industry and travels the globe.