More UK in-house teams plan to cut legal spend than most global peers, study shows

Economic worries are higher among UK corporate legal departments, according to a Thomson Reuters survey

UK corporate legal teams are planning to trim expenses Shutterstock

Almost a third of UK corporate legal departments are expected to tighten their legal spend over the coming months in response to tougher economic conditions, more than most other regions, according to a Thomson Reuters study.

Some 31% of UK in-house teams are planning to cut spending, compared to 27% of firms in mainland Europe and 21% in the US, according to the 2023 State of the Corporate Law Department Report. Just 8% of Asian in-house teams said they would be reducing legal spend. Canada was the only country that was higher, with 33% of teams planning to pare spending. In-house teams globally are increasingly seeking to manage costs by outsourcing work to alternative legal service providers (ALSPs) and smaller law firms.

UK corporate legal departments are also more worried about economic instability than their peers at international companies. More than a fifth (22%) of UK teams view the economic and FX backdrop as a key risk over the next three to five years, compared to 15% in Canada, 13% in mainland Europe, 11% in the US and 3% in Asia Pacific.

Hillary McNally, general manager of corporates legal at Thomson Reuters, said: “Economic uncertainty in the UK, including lingering concerns about the long-term impact of Brexit means corporate law departments are more anxious than their global counterparts about the risks posed by a weaker economy.” 

She added that global corporate legal departments are more concerned about the changing regulatory landscape and the growing threat of cross-border disputes.

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In-house teams in the UK have also returned to the office faster in the wake of the pandemic than other regions. Less than 1% of UK in-house teams are still working remotely full time compared to more than a fifth in the US (22%). In Canada that number is 16%, with Asia Pacific at 10% and mainland Europe at 4%.

McNally said: “In house legal teams in the UK have moved much more quickly than other regions in bringing staff back to the office either within a hybrid model or full time. Firms in the UK are expecting teams to come into the office, often two or three days per week, so that they can benefit from in-person collaboration and build up the social aspect of the workplace.” 

A survey of in-house teams in England and Wales published earlier this month by the Solicitors Regulation Authority found that one in 10 in-house teams are struggling to meet their regulatory obligations due to heavy workloads, while a further 5% say they feel pressured by their employers to ignore or suppress information.

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