- More than four in ten legal departments (42%) have received cost-cutting mandates from their broader organizations in the past year, according to an industry report.
- At the same time, 58% of legal departments experienced major rate hikes from their law firms, with 23% of CLOs saying the increases have been difficult to manage.
- Meanwhile, 58% of CLOs oversee three or more additional business functions beyond legal and 27% oversee five or more, the Association of Corporate Counsel’s 2024 Chief Legal Officers Survey found. The report was produced in partnership with Exterro, the data risk management software company.
The pressure in-house legal teams face to cut costs comes as legal chiefs have been taking on added responsibilities. Along those lines, 59% of CLOs said their workload has “increased significantly” or “somewhat increased” over the past year.
One way many legal departments are aiming to reduce spending is by improving the efficiency of their operations.
Along those lines, 45% of CLOs said they plan to invest in new technology and 27% said they are seeking greater collaboration with their organization’s overall operations department, the ACC/Exterro report found.
“Squeezing general counsel resources while at the same time expanding their remit is unlikely to be sustainable for the long term,” said Veta T. Richardson, ACC president & CEO, in a press release about the report. “Improving operational efficiency and investing in new technology will help, but it remains unclear if those efforts will be enough.”
“What is clear is the unwavering dedication and resourcefulness of CLOs to represent their organizations to the highest standards possible in a complicated and challenging business and regulatory environment,” Richardson said.
Two-thirds of legal chiefs expressed a belief that AI will have a “mostly positive” or “somewhat positive” impact on the in-house legal profession. Document analysis and drafting documents were the applications CLOs think have the most potential to benefit in-house legal teams.
On the outside counsel front, the law firm rate increases have resulted in 40% of GCs expecting an increase in outside counsel spending in the coming year, according to a Thomas Reuters legal industry report.
From January through November of last year, Am Law 100 firms raised their worked rates by more than 7% on average and Am Law Second Hundred firms raised their worked rates by more than 5% on average, Thomson Reuters found.
Amid the law firm rate increases, in-house legal departments have been placing a greater emphasis on outside counsel management.
Another approach legal departments are taking in hopes of cutting costs is bringing more work in-house, with two-thirds of legal teams saying they are doing so, according to a previous report from the ACC and Everlaw.
The 2024 ACC/Exterro report features insights from 669 participants from organizations spanning 20 industries and 31 countries.
The legal chiefs who were surveyed range from those working in small one-lawyer legal departments to many in some of the world’s largest multinational corporations, the report said.