National Study Reveals In-House Legal Teams Face a Perfect Storm of Rising Law Firm Costs and Talent Shortages Amidst Increasing Workloads and Complexity
Majority of GCs reporting double-digit budget cuts and intensifying resource crunch as they wrestle with a fast-evolving legal and technology landscape
The vice is tightening on in-house legal departments as they grapple with a perfect storm of challenges that have plagued GCs for years, turning up the heat on under-resourced, overworked teams that were already fighting the scourge of burnout.
Budgets are being squeezed to the breaking point—96% of GCs had their budgets cut coming into 2024, and 54% experienced cuts of more than 10%—as standard law firm rates rise an expected 6% to 8%, taking an ever-larger slice of GCs’ shrinking budget pie.1
Recruiting and retaining top quality and specialized talent is more difficult than ever, with 80% of GCs girding for a headcount freeze in the next 12 months. And a deluge of complex new financial, cybersecurity, privacy, AI, and other laws and regulations demand attention to ensure compliance and mitigate risk for the business
The kicker: While 97% of GCs engaged outside counsel due to their lack of resources, that approach proved problematic. An astounding 100% of GCs reported cost, quality, and other challenges that made them regret those law firm engagements in some way. It appears the industry has crossed the tipping point, as 89% of GCs surveyed no longer view law firms as a completely effective solution to their resourcing challenges.
Latest Hrtech Insights: MDM Software in 2024: Addressing Challenges of the Near Future in Corporate Devices
These insights, along with additional research results and observations, are included in View from the Top: GCs’ 2024 Outlook on Budgets, Talent, and Innovation, a new national research study of 300 GCs at companies ranging from small and mid-sized businesses to large enterprises, conducted by Wakefield Research and commissioned by Axiom. The study highlights the urgent need for legal departments to embrace innovative solutions to drive efficiency, mitigate risk, and uphold their company’s values.
“GCs and CFOs are increasingly challenged by declining budgets, rising operational costs, and new technology and compliance challenges,” said Ashlin Quirk, SVP and General Counsel at Axiom. “Wakefield’s study underscores the need for GCs, CFOs, and legal ops to rethink resourcing and embrace a more modern, flexible approach that lets them variabilize more of their spend, and respond dynamically to the ebb and flow of work—including projects they would normally send to their law firms. Axiom’s broad array of in-house solutions and law firm services are designed to help legal teams respond to these changing demands, helping them optimize budgets, get quality and specialized legal talent when and where they need it, and confidently meet the businesses’ needs to drive long-term value.”
Other insights disclosed in View from the Top: GCs’ 2024 Outlook on Budgets, Talent, and Innovation include:
The top practice areas most likely to be in demand in the next two years: technology and product development (49%), data privacy and cybersecurity (48%), and new or emerging areas, such as AI (41%).
Most in-house legal departments are unprepared to meet those technology demands: 65% reported a lack of technology and product development lawyers in-house, 47% have no data privacy and cybersecurity lawyers on staff, and 70% don’t have resources in-house for new or emerging practice areas such as AI.
87% of GCs reported concern over their ability to invest in the necessary talent and resources they need.
81% of GCs said their teams don’t have the in-house staffing to accomplish their required tasks.
Almost 40% of the work GCs outsourced to law firms could have been addressed by their in-house team if time and staffing allowed.
The good news: GCs seem to recognize the old models are broken, and hunger for innovation. Fully 85% of GCs who engaged a law firm for support said they’d outsource legal matters to a modern legal talent provider if they could save money and maintain high quality, oversight, and accountability. This shift in mindset represents a significant opportunity for legal departments to embrace innovative solutions that can help them navigate the challenges of an increasingly complex, evolving industry.
Axiom commissioned Wakefield Research to engage 300 General Counsels at U.S. companies ranging from small and mid-sized businesses to large enterprises. Half of respondents were GCs at SMBs, and half were GCs at large enterprises. The 35-question online study was conducted in January and February.
Browse The Complete Interview About Hrtech : HRTech Interview with Tommy Barav, Founder and CEO at timeOS
[To share your insights with us, please write to pghosh@itechseries.com ]