In-house legal departments are using increased budgets to expand their own teams, with general counsel adding specialist lawyers able to take instructions that would have previously gone to external firms.
That is the conclusion of research conducted by Laurence Simons for the Association of Corporate Counsel among the ACC’s European, Middle Eastern and African members.
The planned growth of in-house capability is dramatic: 51% of the 182 departments interviewed will bring regulatory issues in-house this year; 30% are bringing insurance and reinsurance in-house; 24% banking and finance work; and 17% tax law. Only 18% foresee external spend increasing over the next year.
Naveen Tuli, global managing partner of Laurence Simons, said the figures reflected a desire for ‘greater control and certainty’ over budgets, and the high value placed on ‘internal knowledge’ at a time when regulatory risks have increased.
The research is the latest study to spell trouble for leading law firms ahead of the results season. The most recent of Citibank and Hildebrandt’s influential Client Advisory reports (2013) concludes ‘all the signs suggest that the most recent four-year trends will continue into the foreseeable future’.
According to Citibank figures demand compound annual growth rate, a sectoral performance measure, declined by 0.4% in 2008-2012.
Several of the UK’s largest law firms are facing calls on the equity partnership and cuts to both fee-earner and back-office staff. Berwin Leighton Paisner revealed last week that 100 jobs are at risk as the firm seeks to cut its salary bill by 15%.
Wragge & Co is reviewing back-office roles, aiming to cut the equivalent of 30 full-time posts. And Bristol-based Osborne Clarke may lose 13 senior associates. It has also been reported that Herbert Smith Freehills is making a £20m call on the equity partnership.
All are among the UK’s 50-largest firms.