What changes in the work of corporate lawyers in 2023 was shown by the Trust Technologies study?

Kommersant got acquainted with the study by Technologies of Trust (TeDo, formerly PwC) on changes in the work of legal departments of Russian companies from the spring of 2022. In most organizations, the number of lawyers (“in-house”) has not decreased, but the volume of tasks and costs have increased significantly. Most often, a company’s legal department consists of 14 people, and its budget, according to Kommersant’s calculations, is about 40 million rubles. per year, a fifth of which goes to external consultants. At the same time, automation systems are being introduced that replace a live lawyer in typical situations. The digitalization of this work is inevitable, which could lead to “some reduction” in the number of full-time employees, according to consultants.

Kommersant got acquainted with the data from the Benchmarking of the Legal Function study, which was conducted by Technologies of Trust (TeDo). The survey among legal departments of Russian companies from various sectors of the economy was conducted from March to June 2023. The vast majority of respondents (82%) belong to an organization within the holding, and 63% of all belong to parent companies. TeDo does not disclose more detailed information about this year’s respondents.

The most current areas of work “inhouses” turned out to be optimization of legal processes, as well as automation and digitalization. In third place is “retention of key lawyers.” Against this background, the majority of firms surveyed noted the retention (56%) and growth of legal team staff (40%) since spring 2022. Only 4% reduced the number of employees. The average number of lawyers in the department was 58 people, the median was 14 people.

This is explained, in particular, by a significant increase in the volume of work – 87% of “inhouses” say this. Major legal challenges over the past year, according to them, were associated with sanctions (80%), changes in payment and supply chains (73%), foreign trade restrictions, exchange controls and counter-sanction restrictions (67%). Slightly less than half of respondents (42%) identified personal data protection, industry regulation by government agencies and import substitution among the key tasks. About a third (31%) of corporate lawyers considered the “political situation” to be the main challenge.

Pen & Paper senior partner Anton Namenov believes that the latter is connected “with the geopolitical situation in which the whole world found itself after February 2022.”

“Both Russian and international legislation have changed significantly and continue to change chaotically, and these changes are reactive in nature, as a reaction to the actions of political actors,” the lawyer emphasizes. According to him, “it is obvious that this has a bad effect on business, since the main driver of its development is stability.”

Over the past period, 80% of legal departments did not reduce expenses. The remaining 20% ​​saved most often on attracting external consultants (in 89% of cases) and business trips (78%). The budget of legal departments was mainly spent on remuneration of full-time employees, decreasing in this part by 5 percentage points year-on-year (to 75.2%).

At the same time, the costs of external lawyers increased significantly in monetary terms, with virtually no change in share (21.8% versus 17.8%).

Thus, the average cost of consultants increased by 83% – from 14.4 million to 26.27 million rubles, and the median value increased by 125% – from 3.55 million to 8 million rubles. Most often, external lawyers were hired to work in the field of international law (51%), intellectual property (46%), M&A (44%) and participation in commercial disputes (37%).

At the same time, managing partner of Bartolius Law Firm, Yuliy Tai, says that inhouses are now “highly bargaining” when hiring external lawyers: “If they had hired so many consultants five years ago, they would have spent twice as much.” In addition, since expenses in rubles have increased, but in terms of share they have remained almost unchanged, this suggests that the overall budget for lawyers has also increased, notes Mr. Tai. Data on the budget are not provided in the study, but using the available indicators, Kommersant calculated the approximate amount of funds allocated to corporate lawyers in the companies participating in the study.

Thus, on average, the budget of the legal department is about 120.5 million rubles, and in most companies it is close to 40 million rubles.

The “inhouses” themselves in addition to salaries they motivate bonuses (in 67% of cases annual, in 33% project-based) and tuition fees (58%). Partner in the tax practice of MEF Legal, Alexander Erasov, confirms that financial motivation for employees is the most common, but not always the most effective, for example, for many lawyers, “a comfortable atmosphere, well-established business processes and the opportunity to gain experience in leading companies in the industry are important.” 67% provide the opportunity to work remotely or hybridly. But only 11% allow lawyers to work from abroad.

The study also notes that a significant portion of legal teams have significantly increased expenses for automation and digitalization. The share of those who invest 10 million rubles or more in these instruments. and higher, increased 2.5 times compared to the previous year – from 12% to 32%. However, the majority of respondents (64%) still budget up to 5 million rubles for these functions.

In-houses prefer to invest in electronic document management systems (64% of respondents), contract designers and systems for their approval (56%). Also, about a third are invested in task management systems (including “single window”), as well as systems for recording lawyers’ time, calculating workload and standardization.

Automation of document flow and the introduction of document templates, in particular, led to the fact that in 70% of responding companies, “in-house” is not always involved in the approval of contracts. Of these, in 88%, lawyers do not check standard contracts, and in 59%, they do not check transactions with a price below a certain financial threshold, which is different for each company.

“At the instigation of Sber, all companies dream of lawyers being replaced by computers, bots and programmers,” notes Yuliy Tai. He admits that this trend will gain momentum, but “all legal functions will not be replaced this way, although the number of employees will decrease.” Mr. Namenov points out that automation “optimizes time spent on the most common and typical issues, of which there are still many.” It also “opens up additional opportunities for growth, as lawyers free up time to develop competencies on more complex issues,” he said.

Anna Zanina, Ekaterina Volkova