The Law Society’s first benchmarking study for the in-house community highlights the growing influence of general counsel in business, with more than two-thirds sitting on their organisation’s board.
The study, to be published this week, also highlights the pressures on in-house legal departments, suggesting an increasing need for departments to ‘re-engineer’ the way they work. This includes getting better at communicating to senior managers the value legal departments add to the organisation.
Workload is continuing to increase in scale and complexity as GCs navigate changing regulations and market conditions which present business challenges. At the same time, resources are stretched as budgets come under increasing strain and the retention and motivation of staff is threatened by work pressure and private practice salaries.
The report states: ‘If these conflicting tensions continue to intensify, something will have to change before serious mistakes are made.’
Half of GCs are able to set legal budgets, the study finds, while two-thirds determine how legal budgets are spent.
Two-thirds of legal departments now use panels of firms, which are considered to offer better cost control and result in stronger relationships. Going out afresh for each piece of work is considered to keep firms ‘on their toes’ and encourage them to be more price-competitive.
More than half of GCs have restructured their department in the past year or plan to do so in the next year.
However, most legal departments do not measure, or report, the value they deliver to the business. The report states: ‘It would be near impossible to quantify the full value added to the department, but steps can be taken to help lift the lid on the “black box” that is legal.’
For example, ‘simply giving senior executives a report that states the quantities of work undertaken, in terms of contracts processed, cases resolved or risks managed would help, particularly if commercial value added or reduced exposures can be quantified in terms of value’.
The GC350 report is the first in a series to develop a baseline ‘from which changes to a range of measures can be tracked in the future’, the Law Society said.
Areas covered include legal budgets and distribution, the profile and influence of legal teams, work distribution, the use of external providers and key challenges facing the in-house sector.
Society chief executive Catherine Dixon said: ‘A GC is not just a legal adviser, she or he is also a business adviser who drives innovation and shapes organisational risk culture.’