Fast-moving geopolitical, regulatory, and technological changes are exerting mounting pressure on in-house lawyers, but many in-house legal departments are neglecting to gather the degree of insight that could help them better prioritize challenges and prepare for the future, according to a new report.
Published earlier in April, the report by EY Canada is partly based on a survey of 1,000 general counsel and chief legal officers from organizations with at least US$1 billion in annual revenue. The organizations span seven industries, 21 sectors, and 21 countries.
The report also draws on in-depth interviews of legal department leaders. The survey period spanned November 2024 through March 2025.
Respondents told EY that the top disruptive forces impacting legal departments are geopolitics (76 percent), regulatory environment (75 percent), and technological advancements like artificial intelligence, which are ramping up both the complexity and volume of risks (74 percent). Respondents said they feel pressure to respond to all three forces quickly and strategically.
However, EY found that many legal departments could improve their approach to challenges. The report noted that while three-quarters of legal departments engage in annual planning, most do not undertake deeper assessments, and less than half have documented their operating strategy and goals.
Only 11 percent of the surveyed legal departments have interviewed stakeholders in the last 12 months. Over the same period, twenty-one percent of respondents said they reviewed their internal and external sourcing of legal work, while 24 percent said they conducted a spend management assessment.
The report found that legal departments are less likely to track performance and efficiency metrics, instead prioritizing litigation and risk-related metrics.
Seventy percent of respondents tracked performance metrics for outcomes related to litigation, investigations, and other matters. However, less than a third tracked other performance metrics, such as those related to outside counsel performance, value, and stakeholder satisfaction ratings.
Respondents were more likely to monitor risk-related metrics. Sixty-two percent tracked compliance rates, while 56 percent tracked risk scores.
Meanwhile, half of the respondents tracked efficiency metrics related to matters, while fewer than a third of respondents followed other efficiency metrics involving utilization rates, timeliness of support, contracts negotiated or executed, and contract cycle times.
“Based on insights from the study, it is clear that any transformation should first be about understanding the problems that the business and the legal function face, along with the priorities that legal must support,” the report said.
“Legal departments can then shape how they allocate budget, control costs, collaborate with the business, source work, upskill talent and use technology to enable – rather than drive – change.”
Ashley John, head of legal operations at mining company Anglo American, told EY that a “quantifiable value methodology” that includes “functional performance metrics with targets to hit” can also help legal departments demonstrate value.
EY recommended that legal departments use stakeholder assessments to help them identify and prioritize business needs, create a formal strategy for meeting those needs, establish and track performance metrics, and share those with stakeholders to demonstrate progress as well as the value they’ve added.
