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October 14, 2015

Thomson Reuters Survey of Legal Departments Highlights In-Sourcing, Outside Partners

Report features division of labor: contracts, intellectual property, M&A, litigation

EAGAN – Eighty-four percent of legal departments outsource half or less of their company’s legal work to outside counsel, with the average department using outside counsel for only 26 percent of their work, noted the Thomson Reuters Legal Department In-Sourcing and Efficiency Report. The report, a survey of more than 300 attorneys working in legal departments, identified best practices to achieve greater efficiency and increase productivity within the legal department and with outside partners.

The survey reinforced that legal departments’ top challenges continue to be “too few resources” and “reducing outside legal costs.” “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.”

And in-house teams are bringing in more talent. Thirty percent of legal departments anticipate staff increases, with the hires being a mix of lawyers from firms and legal departments, as well as paralegals. In 2014, 60 percent of legal departments surveyed hired new staff. Additionally, new positions have been created and the majority of those focus on contracts (37 percent) and compliance (36 percent).

As legal departments continue to evaluate the amount of work sent to outside counsel, 35 percent reported a decrease. Only 24 percent increased outside counsel reliance, and very few legal departments indicated they have the capacity or capability to handle the entirety of an organization’s legal work without engaging outside counsel.

“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 Laughlin.

The report describes the biggest challenges legal departments are currently facing, along with staffing trends, on-boarding, technology, and costs of outside counsel. In addition, it assesses selected workflows, including contract drafting and negotiation; intellectual property; mergers and acquisitions; and litigation and dispute management.

Download and read the full survey report here.

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