" class="no-js "lang="en-US"> Wolters Kluwer ELM Solutions LegalVIEW Insights Report Reveals Biggest Shakeup in Legal Services Market since Great Recession - Fintech Finance
Thursday, March 28, 2024

Wolters Kluwer ELM Solutions LegalVIEW Insights Report Reveals Biggest Shakeup in Legal Services Market since Great Recession

Last year produced the biggest shakeup in the outside legal services market since the Great Recession as 90 percent of corporate legal departments (CLDs) reduced their active provider relationships, and 16 percent of attorney-client relationships that existed in 2019 were paused in 2020. That’s according to Wolters Kluwer ELM Solutions, which today published its LegalVIEW Insights report  –  the first of four quarterly reports in 2021 – analyzing emerging legal industry issues using data from its LegalVIEW Data warehouse.

The inaugural report, compiled by Nathan Cemenska, Director of Legal Operations and Industry Insights for the legal services technology company, focuses on corporate legal department (CLD) law firm vendor usage – including CLDs at financial services firms. Due in part to the 2020 COVID-19 pandemic and its effect on the economy, every law firm segment was impacted. From the largest, most prestigious firms to solo practitioners, every group saw a significant number of attorney-client relationships put on hiatus. The mean number of outside providers actively serving the typical corporate law department declined by 12 percent year-over-year, and the median number of providers dropped by 16 percent compared with 2019.

Additional highlights from the inaugural LegalVIEW Insights report include:

  • Am Law 150-200 firms were those most likely to have clients go on hiatus, followed by firms outside the top 200.
  • In the last six years, approximately 32 percent of CLDs sent half or more of their work, in dollar volume, to the top 100 global law firms. Some CLDs consistently send 75 percent of their work to those top firms.
  • The extent to which CLDs send work to those 100 largest firms did not change much year-over-year. Forty-six percent of CLDs show less than 15 percent variance in their utilization of those firms over the last six years.
  • Most CLDs consolidated 80 percent of their work into 20 percent or fewer of their vendors – a recognized best practice that reduces administrative overhead and creates opportunities for volume discounts.  HIn 2020, larger law firms tended to experience market share growth, while smaller firms lost market share.  Conversely, unranked law firms saw their market share decrease by more than two percentage points, year-over-year, and they have lost four percentage points overall since 2016.

“Last year, a significant number of relationships between law firms and their clients went dark—not a single legal invoice was sent in these cases. With the economy coming back, those gaps are going to be filled, but it won’t always be by the firms that lost the business,” said Cemenska. “Alternative legal service providers, the Big Four and competing law firms are hungry for that business as are in-house legal teams, which continue to get better at doing the work themselves.”

The release of the report follows a busy 2020 for the company which reported a number of major awards and product innovations. In October 2020, for example, the company revealed new AI technology for CLM Matrix which now integrates with both the Passport® and TyMetrix® 360° platforms and includes new workflows that mitigate risk to lead to better business outcomes.

The CLM Matrix 20.2 Fall release features AI-powered Contract Intelligence capabilities including contract migration capabilities. “The easy contract migration process involves the automation of metadata and clause extraction to deliver speed, efficiency, and data in order to bring older contracts into the central repository will reduce risk, ease contract creation, and improve performance,” ELM Solutions said in an official release statement. “By leveraging historical data, the new technology will provide insights that will lead to improved business outcomes.  CLM Matrix now integrates with the Passport and TyMetrix 360 platforms creating workflows that help customers leverage the power of contract management in concert with matter management, providing increased efficiencies and greater visibility into contract transactions or litigation for legal and contract teams.”

In September 2020, meanwhile, ELM Solutions announced that the U.S. Patent and Trademark Office (USPTO) had granted the company patent #: 10,733,675 for the groundbreaking artificial intelligence (AI) technology behind LegalVIEW® BillAnalyzer. Wolters Kluwer introduced LegalVIEW® BillAnalyzer in 2017 to help corporate legal departments and insurance claims organizations more efficiently manage their incoming legal invoices and improve cost management. “The proprietary AI-powered bill review automated scoring system is able to provide a high degree of accuracy and efficiency in the overall bill review process compared to non AI-powered bill review processes,” according to the company. “This unique design leads to high quality, accurate billing adjustments and cleaner billing over time. The patented AI technology leverages natural language processing and several model-based predictors to power a bill review system that delivers customers best-in-class results.”

In conjunction with the LegalVIEW Insights reports, Wolters Kluwer ELM Solutions will produce an ongoing series of LegalVIEW Insights blogs, webinars and other content discussing the emerging trends from the LegalVIEW Data Warehouse -the most comprehensive legal spend database in the world, with more than $140 billion in invoices. On Thursday, April 15, for example, Cemenska and legal technology strategist Brad Blickstein, Principal, Blickstein Group, will host a webinar offering a deeper look at data and potential long-term trends from the inaugural report.

ELM Solutions, part of Wolters Kluwer’s Governance, Risk & Compliance division, bills itself as “the market-leading global provider of enterprise legal spend and matter management, contract lifecycle management and legal analytics solutions.” The company provides a comprehensive suite of tools that address the growing needs of corporate legal operations departments to increase operational efficiency and reduce costs. Corporate legal and insurance claims departments trust its innovative technology and end-to-end customer experience to drive world-class business outcomes.

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