Is it time to flip the script on legal team operations?
In house legal departments must adapt, innovate and evolve if they are to meet the needs of rapidly changing commercial environments according to a 2024 study. A survey of 300 American general counsel (GC) found that a lack of resources is impacting the ability of in house legal teams to accomplish their required tasks.
Slashed budgets, staffing shortages, a lack of legal expertise in certain areas and the increasing costs associated with engaging external counsel were all issues facing in house legal teams according to Axiom’s 2024 Outlook on Budgets, Talent and Innovation.
With 81% of general counsel reporting that their teams lacked the resources to get the job done, it’s perhaps not surprising that this sector which is traditionally slow to embrace changing is looking to flip the script.
Challenges for in house legal teams: struggling to do more with less
It’s not news to anyone working in a legal team that many corporates are tightening their belts in an effort to be more resilient during tough economic times. And general counsel are feeling the pinch.
In fact, 87% of general counsel surveyed were concerned their legal department wouldn’t be able to invest in the necessary talent and resources due to current economic volatility.
Of course, this is happening at a time when “there is an expectation that in-house legal teams will do more to identify, manage and mitigate legal risks“, so budget cuts are only adding to the already significant pressure on legal departments.
Budget constraints
Almost all (96%) general counsel surveyed reported having their budgets cut this year according to the study conducted by Wakefield Research. This is on top of 95% reporting cuts in 2023.
On average, legal departments experienced budget reductions of 11% due to economic conditions, leaving in house counsel concerned about the impact on talent and resources.
Legal departments for large companies with more than $1 billion turnover experienced cuts of 13% on average while small to medium sized businesses were slightly lower at 10%.
Resourcing challenges
One of the key challenges for in house legal teams right now is tackling increasing workloads with fewer resources.
But while in house teams are stretched to the limit, 100% of general counsel struggle to find the right attorneys to address their needs. Coupled with many firms placing a freeze on hiring, it’s not surprising that many teams are overworked and under-resourced.
Turnover crisis
Fewer resources, reduced budgets and more pressure makes it hard to get in house team members to stick around. With concern about the ability to invest in the necessary talent and resources, the spotlight falls on retention.
However, resourcing challenges can create a snowball effect that impacts the ability to keep current staff. “As more people leave, there’s more work to do, causing more people to leave. It’s a potentially vicious cycle that can, ultimately, spin out of control,” says the report.
General counsel cited high work volumes, repetitive tasks, complicated work outside skillsets, lack of professional development and insufficient tech resources as some of the things causing their people to explore new opportunities.
Specialist skill gaps
Speaking of skillsets…how many of your team members are scrambling to do work outside their areas of expertise due to skill shortages? The looming skills gap across the sector has been spoken about for at least five years.
As law firms and corporates compete for top legal talent, digital literacy, soft skills such as communication and the ability to understand the role of corporate lawyers in the overall context of the firm and its sector become critical.
The ability of smaller teams to maintain skills in a range of niche matters is challenging. In this environment, 56% of GCs turned to external law firms due to a lack of in house capacity or specialist expertise.
External law firms handle over a quarter of legal matters
Just how much are in house teams relying on external counsel? The figures are staggering. Axiom’s survey found that 97% of general counsel engaged a law firm to handle some legal matters last year. These engagements accounted for 26% of the company’s legal matters on average.
Top reasons for engaging a law firm
The report dug deeper into the reasons respondents engaged a law firm in the past year which offers some interesting insights.
- Lack of in-house capacity
- Large-scale legal matters
- Time/speed
- Additional independent perspective required
- Wish of internal client.
While large-scale legal matters and time/speed issues are separated out here, they all relate to the capacity of in house lawyers which again reflects on budget and resourcing constraints.
The lower budget-higher cost conundrum
Despite rising costs of engaging external law firms, businesses with greater budget cuts were more likely to use external firms to handle matters:
- 21% of matters were handled by outside legal firms among departments with budget cuts of less than 10%
- 30% of matters were handled by outside legal firms among departments with budget cuts of more than 10%.
And so the cycle continues: fewer resources leads to more pressure on in house teams which is “solved” by spending more on outside legal services which are becoming more costly. Is it time to flip the script?
Why reliance on external legal counsel is not a panacea
We’ve written on the challenges of handling external counsel previously. Although technology like Dazychain can simplify outside counsel management, the legal profession is notoriously slow to adopt new tech.
Getting external law firms involved in a business’ legal matters is a surefire way to deplete budgets faster. And, 100% of GCs who engaged a law firm said there were aspects of the experience that caused them to regret this approach.
Top reasons why GCs regretted hiring law firms
- Administrative management took too much time
- Gave conceptual legal advice when we needed practical advice
- Lack of commercial/business acumen
- Lack of institutional knowledge
- Length onboarding process
- Didn’t prioritize our business.
Another issue highlighted by the Axiom report was law firm preferences for alternative pricing structures or alternative fee arrangements (AFAs) with contingent or success fees, dead deal discounts or blended rates. Over one third of GCs felt they spent excessive time negotiating AFAs and that they led to uncertainty and the risk of higher costs.
The budget versus values trade-off
Cost constraints don’t just impact resourcing; they affect all aspects of legal operations. Every day, a chief legal officer has to make decisions about whether to prioritize the bottom line over legal department values and even more so when budgets are tight.
Despite 97% of general counsel reporting that they”see themselves as the primary steward of the company’s values”, a role they perceive as being “more important than ever”, 59% said they’d put budgets first in the case of deteriorating economic or financial conditions.
According to the report, “this underscores the harsh reality of budget cuts and their ripple effect on organizational values, not to mention performance.”
So, where to from here for in house legal teams? It’s time to embrace tech.
In a dynamic environment where economic uncertainty, staffing challenges and rising costs are the norm, in house teams need to innovate and adapt if they’re to continue to deliver the value that has become expected of high performing legal departments.
Exploring new options for resourcing such as leveraging the alternative legal services industry, building more specialist in-house skills and improving retention programs for existing team members is a start.
Matter management technology is a game-changer. Implementing a dedicated matter management platform can improve just about every aspect of your legal department, offering visibility over operations, improving collaboration across internal and external teams, and allocating resources more effectively.
Plus, you’ll have access to the data you need to demonstrate the volume, risk, and the importance of the team’s work for those critical resourcing conversations.
How technology can power up outside counsel management
- Improve accountability and visibility of work performed
- Accurately monitor budgets and flag potential overspend
- Measure performance against contracted KPIs and business objectives
- Fast-track admin and onboarding.
How technology can help your in house legal department do more with less
- Eliminate repetitive and unengaging tasks
- Save hours of administration through automation
- Improve efficiency and workflows even with a lean workforce, inadequate tools, and financial restrictions
- Prioritize resource allocation where its most needed
- Empowers your in house legal team to meet compliance and governance legislation, stay vigilant to risks, and report on emerging or potential legal risks
- Streamline knowledge-sharing processes, improve collaboration, and ensure that critical legal knowledge is readily available to team members when needed.
Transform your legal department with Dazychain
Dazychain is designed specifically for in house legal departments. Built from the ground up, Our solution ticks all the boxes for in house legal teams, with the features, functionality, and flexibility you need to help your team do more with less. Plus it makes it easy for your team to ensure external counsel are delivering as expected.
Monitor internal and external expenses in real time so you’ll always know how you’re tracking against budgets. Our workflow and automation functions slash the amount of repetitive and manual work, so your team can get on with what they do best. Book a demo today.
Challenges for in house legal teams: struggling to do more with less
It’s not news to anyone working in a legal team that many corporates are tightening their belts in an effort to be more resilient during tough economic times. And general counsel are feeling the pinch.
In fact, 87% of general counsel surveyed were concerned their legal department wouldn’t be able to invest in the necessary talent and resources due to current economic volatility.
Of course, this is happening at a time when “there is an expectation that in-house legal teams will do more to identify, manage and mitigate legal risks“, so budget cuts are only adding to the already significant pressure on legal departments.
Budget constraints
Almost all (96%) general counsel surveyed reported having their budgets cut this year according to the study conducted by Wakefield Research. This is on top of 95% reporting cuts in 2023.
On average, legal departments experienced budget reductions of 11% due to economic conditions, leaving in house counsel concerned about the impact on talent and resources.
Legal departments for large companies with more than $1 billion turnover experienced cuts of 13% on average while small to medium sized businesses were slightly lower at 10%.
Resourcing challenges
One of the key challenges for in house legal teams right now is tackling increasing workloads with fewer resources.
But while in house teams are stretched to the limit, 100% of general counsel struggle to find the right attorneys to address their needs. Coupled with many firms placing a freeze on hiring, it’s not surprising that many teams are overworked and under-resourced.
Turnover crisis
Fewer resources, reduced budgets and more pressure makes it hard to get in house team members to stick around. With concern about the ability to invest in the necessary talent and resources, the spotlight falls on retention.
However, resourcing challenges can create a snowball effect that impacts the ability to keep current staff. “As more people leave, there’s more work to do, causing more people to leave. It’s a potentially vicious cycle that can, ultimately, spin out of control,” says the report.
General counsel cited high work volumes, repetitive tasks, complicated work outside skillsets, lack of professional development and insufficient tech resources as some of the things causing their people to explore new opportunities.
Specialist skill gaps
Speaking of skillsets…how many of your team members are scrambling to do work outside their areas of expertise due to skill shortages? The looming skills gap across the sector has been spoken about for at least five years.
As law firms and corporates compete for top legal talent, digital literacy, soft skills such as communication and the ability to understand the role of corporate lawyers in the overall context of the firm and its sector become critical.
The ability of smaller teams to maintain skills in a range of niche matters is challenging. In this environment, 56% of GCs turned to external law firms due to a lack of in house capacity or specialist expertise.
External law firms handle over a quarter of legal matters
Just how much are in house teams relying on external counsel? The figures are staggering. Axiom’s survey found that 97% of general counsel engaged a law firm to handle some legal matters last year. These engagements accounted for 26% of the company’s legal matters on average.
Top reasons for engaging a law firm
The report dug deeper into the reasons respondents engaged a law firm in the past year which offers some interesting insights.
- Lack of in-house capacity
- Large-scale legal matters
- Time/speed
- Additional independent perspective required
- Wish of internal client.
While large-scale legal matters and time/speed issues are separated out here, they all relate to the capacity of in house lawyers which again reflects on budget and resourcing constraints.
The lower budget-higher cost conundrum
Despite rising costs of engaging external law firms, businesses with greater budget cuts were more likely to use external firms to handle matters:
- 21% of matters were handled by outside legal firms among departments with budget cuts of less than 10%
- 30% of matters were handled by outside legal firms among departments with budget cuts of more than 10%.
And so the cycle continues: fewer resources leads to more pressure on in house teams which is “solved” by spending more on outside legal services which are becoming more costly. Is it time to flip the script?
Why reliance on external legal counsel is not a panacea
We’ve written on the challenges of handling external counsel previously. Although technology like Dazychain can simplify outside counsel management, the legal profession is notoriously slow to adopt new tech.
Getting external law firms involved in a business’ legal matters is a surefire way to deplete budgets faster. And, 100% of GCs who engaged a law firm said there were aspects of the experience that caused them to regret this approach.
Top reasons why GCs regretted hiring law firms
- Administrative management took too much time
- Gave conceptual legal advice when we needed practical advice
- Lack of commercial/business acumen
- Lack of institutional knowledge
- Length onboarding process
- Didn’t prioritize our business.
Another issue highlighted by the Axiom report was law firm preferences for alternative pricing structures or alternative fee arrangements (AFAs) with contingent or success fees, dead deal discounts or blended rates. Over one third of GCs felt they spent excessive time negotiating AFAs and that they led to uncertainty and the risk of higher costs.
The budget versus values trade-off
Cost constraints don’t just impact resourcing; they affect all aspects of legal operations. Every day, a chief legal officer has to make decisions about whether to prioritize the bottom line over legal department values and even more so when budgets are tight.
Despite 97% of general counsel reporting that they”see themselves as the primary steward of the company’s values”, a role they perceive as being “more important than ever”, 59% said they’d put budgets first in the case of deteriorating economic or financial conditions.
According to the report, “this underscores the harsh reality of budget cuts and their ripple effect on organizational values, not to mention performance.”
So, where to from here for in house legal teams? It’s time to embrace tech.
In a dynamic environment where economic uncertainty, staffing challenges and rising costs are the norm, in house teams need to innovate and adapt if they’re to continue to deliver the value that has become expected of high performing legal departments.
Exploring new options for resourcing such as leveraging the alternative legal services industry, building more specialist in-house skills and improving retention programs for existing team members is a start.
Matter management technology is a game-changer. Implementing a dedicated matter management platform can improve just about every aspect of your legal department, offering visibility over operations, improving collaboration across internal and external teams, and allocating resources more effectively.
Plus, you’ll have access to the data you need to demonstrate the volume, risk, and the importance of the team’s work for those critical resourcing conversations.
How technology can power up outside counsel management
- Improve accountability and visibility of work performed
- Accurately monitor budgets and flag potential overspend
- Measure performance against contracted KPIs and business objectives
- Fast-track admin and onboarding.
How technology can help your in house legal department do more with less
- Eliminate repetitive and unengaging tasks
- Save hours of administration through automation
- Improve efficiency and workflows even with a lean workforce, inadequate tools, and financial restrictions
- Prioritize resource allocation where its most needed
- Empowers your in house legal team to meet compliance and governance legislation, stay vigilant to risks, and report on emerging or potential legal risks
- Streamline knowledge-sharing processes, improve collaboration, and ensure that critical legal knowledge is readily available to team members when needed.
Transform your legal department with Dazychain
Dazychain is designed specifically for in house legal departments. Built from the ground up, Our solution ticks all the boxes for in house legal teams, with the features, functionality, and flexibility you need to help your team do more with less. Plus it makes it easy for your team to ensure external counsel are delivering as expected.
Monitor internal and external expenses in real time so you’ll always know how you’re tracking against budgets. Our workflow and automation functions slash the amount of repetitive and manual work, so your team can get on with what they do best. Book a demo today.
Challenges for in house legal teams: struggling to do more with less
It’s not news to anyone working in a legal team that many corporates are tightening their belts in an effort to be more resilient during tough economic times. And general counsel are feeling the pinch.
In fact, 87% of general counsel surveyed were concerned their legal department wouldn’t be able to invest in the necessary talent and resources due to current economic volatility.
Of course, this is happening at a time when “there is an expectation that in-house legal teams will do more to identify, manage and mitigate legal risks“, so budget cuts are only adding to the already significant pressure on legal departments.
Budget constraints
Almost all (96%) general counsel surveyed reported having their budgets cut this year according to the study conducted by Wakefield Research. This is on top of 95% reporting cuts in 2023.
On average, legal departments experienced budget reductions of 11% due to economic conditions, leaving in house counsel concerned about the impact on talent and resources.
Legal departments for large companies with more than $1 billion turnover experienced cuts of 13% on average while small to medium sized businesses were slightly lower at 10%.
Resourcing challenges
One of the key challenges for in house legal teams right now is tackling increasing workloads with fewer resources.
But while in house teams are stretched to the limit, 100% of general counsel struggle to find the right attorneys to address their needs. Coupled with many firms placing a freeze on hiring, it’s not surprising that many teams are overworked and under-resourced.
Turnover crisis
Fewer resources, reduced budgets and more pressure makes it hard to get in house team members to stick around. With concern about the ability to invest in the necessary talent and resources, the spotlight falls on retention.
However, resourcing challenges can create a snowball effect that impacts the ability to keep current staff. “As more people leave, there’s more work to do, causing more people to leave. It’s a potentially vicious cycle that can, ultimately, spin out of control,” says the report.
General counsel cited high work volumes, repetitive tasks, complicated work outside skillsets, lack of professional development and insufficient tech resources as some of the things causing their people to explore new opportunities.
Specialist skill gaps
Speaking of skillsets…how many of your team members are scrambling to do work outside their areas of expertise due to skill shortages? The looming skills gap across the sector has been spoken about for at least five years.
As law firms and corporates compete for top legal talent, digital literacy, soft skills such as communication and the ability to understand the role of corporate lawyers in the overall context of the firm and its sector become critical.
The ability of smaller teams to maintain skills in a range of niche matters is challenging. In this environment, 56% of GCs turned to external law firms due to a lack of in house capacity or specialist expertise.
External law firms handle over a quarter of legal matters
Just how much are in house teams relying on external counsel? The figures are staggering. Axiom’s survey found that 97% of general counsel engaged a law firm to handle some legal matters last year. These engagements accounted for 26% of the company’s legal matters on average.
Top reasons for engaging a law firm
The report dug deeper into the reasons respondents engaged a law firm in the past year which offers some interesting insights.
- Lack of in-house capacity
- Large-scale legal matters
- Time/speed
- Additional independent perspective required
- Wish of internal client.
While large-scale legal matters and time/speed issues are separated out here, they all relate to the capacity of in house lawyers which again reflects on budget and resourcing constraints.
The lower budget-higher cost conundrum
Despite rising costs of engaging external law firms, businesses with greater budget cuts were more likely to use external firms to handle matters:
- 21% of matters were handled by outside legal firms among departments with budget cuts of less than 10%
- 30% of matters were handled by outside legal firms among departments with budget cuts of more than 10%.
And so the cycle continues: fewer resources leads to more pressure on in house teams which is “solved” by spending more on outside legal services which are becoming more costly. Is it time to flip the script?
Why reliance on external legal counsel is not a panacea
We’ve written on the challenges of handling external counsel previously. Although technology like Dazychain can simplify outside counsel management, the legal profession is notoriously slow to adopt new tech.
Getting external law firms involved in a business’ legal matters is a surefire way to deplete budgets faster. And, 100% of GCs who engaged a law firm said there were aspects of the experience that caused them to regret this approach.
Top reasons why GCs regretted hiring law firms
- Administrative management took too much time
- Gave conceptual legal advice when we needed practical advice
- Lack of commercial/business acumen
- Lack of institutional knowledge
- Length onboarding process
- Didn’t prioritize our business.
Another issue highlighted by the Axiom report was law firm preferences for alternative pricing structures or alternative fee arrangements (AFAs) with contingent or success fees, dead deal discounts or blended rates. Over one third of GCs felt they spent excessive time negotiating AFAs and that they led to uncertainty and the risk of higher costs.
The budget versus values trade-off
Cost constraints don’t just impact resourcing; they affect all aspects of legal operations. Every day, a chief legal officer has to make decisions about whether to prioritize the bottom line over legal department values and even more so when budgets are tight.
Despite 97% of general counsel reporting that they”see themselves as the primary steward of the company’s values”, a role they perceive as being “more important than ever”, 59% said they’d put budgets first in the case of deteriorating economic or financial conditions.
According to the report, “this underscores the harsh reality of budget cuts and their ripple effect on organizational values, not to mention performance.”
So, where to from here for in house legal teams? It’s time to embrace tech.
In a dynamic environment where economic uncertainty, staffing challenges and rising costs are the norm, in house teams need to innovate and adapt if they’re to continue to deliver the value that has become expected of high performing legal departments.
Exploring new options for resourcing such as leveraging the alternative legal services industry, building more specialist in-house skills and improving retention programs for existing team members is a start.
Matter management technology is a game-changer. Implementing a dedicated matter management platform can improve just about every aspect of your legal department, offering visibility over operations, improving collaboration across internal and external teams, and allocating resources more effectively.
Plus, you’ll have access to the data you need to demonstrate the volume, risk, and the importance of the team’s work for those critical resourcing conversations.
How technology can power up outside counsel management
- Improve accountability and visibility of work performed
- Accurately monitor budgets and flag potential overspend
- Measure performance against contracted KPIs and business objectives
- Fast-track admin and onboarding.
How technology can help your in house legal department do more with less
- Eliminate repetitive and unengaging tasks
- Save hours of administration through automation
- Improve efficiency and workflows even with a lean workforce, inadequate tools, and financial restrictions
- Prioritize resource allocation where its most needed
- Empowers your in house legal team to meet compliance and governance legislation, stay vigilant to risks, and report on emerging or potential legal risks
- Streamline knowledge-sharing processes, improve collaboration, and ensure that critical legal knowledge is readily available to team members when needed.
Transform your legal department with Dazychain
Dazychain is designed specifically for in house legal departments. Built from the ground up, Our solution ticks all the boxes for in house legal teams, with the features, functionality, and flexibility you need to help your team do more with less. Plus it makes it easy for your team to ensure external counsel are delivering as expected.
Monitor internal and external expenses in real time so you’ll always know how you’re tracking against budgets. Our workflow and automation functions slash the amount of repetitive and manual work, so your team can get on with what they do best. Book a demo today.
