Enterprise legal management (ELM) is a practice management strategy of corporate legal departments, insurance claims departments, and government legal and contract management departments.
ELM developed during the 1990s in response to increased corporate demands for accountability, transparency, and predictability, and employs software to manage internal legal documents and workflows, electronic billing and invoicing, and to guide decision-making through reporting and analytics.
Definitions
Still an evolving term, ELM is a recognized management discipline and a strategic objective of general counsel. Some have argued that ELM falls within the broader category of corporate governance, risk, and compliance (GRC); others maintain that ELM and GRC are separate entities along a continuum.
Separate but related technologies include information governance, electronic discovery, legal hold, contract management, corporate secretary, and board of directors’ communications. ELM software may integrate some or all of these components.
Historical development
Early practice management
Law practice management refers to the business aspect of operating a law firm or in-house legal team. Components include economics, workplace communication and management, ethics, and client service.
Historically, corporate legal spend was considered a “black box” with limited predictability and transparency, making it difficult for corporate legal teams to parse differences of efficiency and cost among outside firms, or to benchmark firm performance against previously hired counsel.
Transition and early adoption
Several factors led to a shift away from traditional, low-technology solutions and toward ELM, most notably the expansion of the Internet during the 1990s and subsequent development of Software as a service (SaaS) platforms. Within legal departments, factors included greater regulatory compliance risk, smaller budgets, and board member demands for greater accountability, predictability, and transparency.
Over time, the demand for budgetary information, including metrics such as the ratio of legal spend to total enterprise revenue, extended beyond board members to include other stakeholders. Corporate legal departments were positioned as the next frontier of corporate efficiency and risk management, and encouraged to operate as a true business partner. This created pressure to reduce costs and, when possible, generate revenue for the larger enterprise.
Departments’ varied sizes and responsibilities created a range of practice management needs. A legal department with a small number of in-house attorneys might oversee thousands of cases managed by outside counsel, while a large internal legal department could handle most cases in-house. Smaller departments focused on management of workflow, collaboration, and spend management; larger departments had greater needs for internal matter management, attorney utilization, and document management.
The first electronic transitions were to generic matter management applications, which replaced paper files as the system of record.
Specialization and expansion
Initial enterprise resource planning systems did not meet the specific needs of legal departments. External legal costs presented unique management challenges because of the billable-hour model and unpredictable labor requirements. Software specialization integrated matter management and preexisting, internal billing software. This integration provided the opportunity to meet management demands for increased communication and information from within corporate legal departments. Ultimately, it extended further to combine legal information with finance, compliance, and risk-management departments.
These developments also presented risks to enterprise-wide information management. Specialized software generated the potential for conflicts between company‐wide enterprise solutions and the ELM systems of in-house legal departments. Additionally, maintaining data security was and remains a preeminent concern, especially for SaaS-based ELM platforms. One in four chief legal officers (CLOs) reported a data breach during 2013–15, with the health-care industry especially vulnerable.
ELM software
The expansion of ELM as a practice management strategy was fostered by the growth of ELM software. That growth, in turn, was made possible through the expansion of the Internet and adoption of SaaS platforms across a wide range of industries. Total revenue of all SaaS providers accelerated into the 2010s, with the International Data Corporation (IDC) forecasting revenue to grow from $22.6 billion to $50.8 billion during 2014–18.