The work in-house legal departments are doing has undergone major transitions over the past few years. In a world where outsourcing is coined as the economical way to manage workflow and drive efficiencies to keep costs down, legal departments are taking a different path and finding that the best solution to cost pressures might just be to bring more work in-house.
According to the recently released Thomson Reuters Legal Department In-Sourcing and Efficiency Report, work with outside counsel has declined over the past two years as more work is being brought in-house. Furthermore, corporate departments don’t anticipate this changing in the current year. These declines continue due to the pressure on corporate counsel to reduce outside legal costs.
Cost pressures are not the only thing challenging corporate departments at this time, however. While outside resources decline, legal work is not slowing and corporate legal departments are charged with having to do more with less. In response to this trend, 60% of legal departments hired new staff in 2014 and one-third of departments anticipate additional growth in 2015. Legal departments are predicting that their hires will be a mix of lawyers from firms, seasoned in-house lawyers, and paralegals.
In addition, corporate legal departments are also creating new roles to meet the demand with 33% of respondents creating new positions in 2014, with the majority of those positions created to address contracts and compliance work, according to the report. For those departments not hiring, in-house lawyers are forced to find ways to become more efficient as more and more work lands on their plates. Presumably, these departments are among those that leveraged alternative staffing arrangements and relied on technology.
Of those surveyed, not all departments are cutting outside spend; about one-fourth of those surveyed will increase their use of outside counsel. In terms of the type of work outside law firms are getting, it is most frequently the more complex litigation and dispute matters.
As the composition of the legal industry continues to evolve, the work being done by legal departments will continue to evolve as well. The current environment paints a picture where a majority of the work is being done in-house as legal departments begin to ramp up their bench strength.