Inside E-Discovery & Beyond: Navigating Legal Digital Disruption report by BDO. Image courtesy of BDO.

Thirty-six percent of legal departments are contemplating leaving their current firms for new outside counsel within the next 12 months, according to a report released earlier this week by professional services firm BDO USA.

The report was created based on the results of a survey to 100 senior in-house lawyers across industries in companies with annual revenues ranging from $100 million to more than $3 billion.

George Socha, managing director at BDO, said he suspects the reason in-house counsel have made the decision to leave their current firms is because of cost savings and the desire for better services.

“In-house counsel are under ever-increasing pressure to reduce their costs,” Socha said. “They are being forced to live and die by metrics in a way that hasn't been the case before.”

Socha further explained that the services they receive for those costs are also playing a factor. Twenty-nine percent of respondents indicated that a lack of innovation is the biggest complaint they have with their firms and 17 percent of respondents said their firms' pricing model is an issue.

The report also indicates that 71 percent of in-house counsel plan on leveraging technology in the next year to streamline legal operations.

“The increasing speed at which the business and legal environments are changing today makes continuous innovation even more an imperative,” said Stephanie Giammarco, BDO's partner and national leader in its technology and business transformation practice.

“They are much more concerned about results, about costs and factors like that than they are about the specific technology used by the other law firms,” Socha said.

Socha said while technology use plays an important role in firm selection, in-house counsel want to make sure that technology is used effectively and efficiently. He said firms are now expected to use technology that in-house counsel has in place. Socha explained that when legal departments have their own technology in place, they can easily view matters and have more control over the data.

“It gives you a much better ability to control the risks of having data go to different locations,” Socha said.

The report also indicated that 54 percent of all respondents said the biggest legal risks with respect to data is a breach.

“From the EU's recently enacted General Data Protection Regulation to a potential U.S. national data privacy law, to hundreds of other regulations at the state and local levels, corporate counsel will not only have to deal with the increasing quantity and complexity of compliance obligations, but also greater standards of accountability and transparency of them from external stakeholders,” Giammarco said.

Because of new regulations such as the GDPR, 59 percent of respondents indicated that they have updated their data privacy notices. Twenty-four percent of respondents said improving cybersecurity is a top priority over the next 12 months.

Socha said aside from regulators looming over companies who do not comply with data privacy laws, companies face higher insurance premiums, reputational risks and this “provides opportunity for someone to bring litigation under any number of causes of action.”