19 October 2016

Survey highlights challenges and changes for legal departments

Research by Thompson Reuters shows how legal departments, whose top challenges continue to be 'too few resources' and 'reducing outside legal costs,' are shifting reliance away from outside counsel.

By Victoria Basham


The report surveyed more than 300 lawyers working in-house and noted that 84 per cent of legal departments outsource half or less of their company’s legal work to outside counsel. The average department used outside counsel for only 26 per cent of their work.

‘Budget and resource pressures brought on by the 2008 financial crisis haven’t let up, and our survey highlights some material changes that legal departments have implemented,’ said Eric Laughlin, managing director of the Corporate segment for Thomson Reuters Legal. ‘Legal departments are innovating – shifting some reliance away from outside counsel by deploying a combination of technology, alternative legal providers and bulked-up internal staffs to meet the needs of their business.’

Almost one third (30 per cent) of legal departments anticipate staff increases, with the hires being a mix of lawyers from firms and legal departments, as well as paralegals. Additionally, new positions have been created and the majority of those focus on contracts (37 per cent) and compliance (36 per cent).

As legal departments continue to evaluate the amount of work sent to outside counsel, 35 per cent reported a decrease. Very few legal departments indicated they have the ability to handle the entirety of an organisation’s legal work without engaging outside counsel, but only 24 per cent increased outside counsel reliance.  

‘Many legal departments have been able to redirect a portion of work or specific tasks to in-house resources, thus decreasing their reliance on outside firms, and 23 percent of respondents said they are consolidating the number of firms they work with as well. For firms, this intensifies the competitive environment – they are competing amongst each other for a shifting pool of work and have to continuously demonstrate value to their clients,’ stated Mr Laughlin.

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