General counsel are increasingly bypassing law firms to go directly to the bar for legal advice, according to a report published today.

A study by research company Winmark found that while commercial law firms are banking on an increase in corporate legal spend to boost their profits over the next year, a change in the way in-house lawyers are allocating their work means there is a ‘shrinking pool of money to be had from this source’.

The report, which will be launched at the Law Society this evening, found that 48% of general counsel said they were increasingly going direct to the bar for legal advice. This was particularly useful for ‘quick and dirty’ one-off advice, it suggested, and indicated companies’ desire for ‘quick, informal and cost-effective access to advice’.

The research also showed that regional firms and offices are benefiting at the expense of the City. A third of general counsel said they had increased the amount of work they sent to regional branches of national firms, while only 8% said this had decreased. More than a quarter said they had sent more work to regional firms, while 12% had sent less.

However, the study showed a significant drop in the use of magic circle firms. Some 27% said they were sending less work to these five elite firms, compared with 15% who were sending more. For the so-called ‘silver circle’, 29% said they were sending more work to this second tier of firms, while 14% were sending less.

Just under a fifth of general counsel said they were farming out more work to cheaper jurisdictions such as New Zealand. The Looking Glass report, based on research including a survey of 81 general counsel, notes that 71% of corporate counsel felt that their level of influence within the business was increasing.

Those who considered themselves to have above-average levels of influence were more likely to keep high-level, strategic work in-house.

The report says: ‘Our research strongly indicates that there is a shrinking pool of money to be had from [in-house departments], not necessarily because companies are cutting their legal spend, but because they are reassessing how they allocate their legal budgets.’

Carol Williams, head of legal at Northern Foods, commented that legal budgets were ‘very tight’ and it made sense to instruct the bar directly to avoid paying law firms just to instruct a barrister.