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How Flexible Resourcing Can Help GCs within Enterprise Legal Departments Better Address Pain Points, Navigate Recession

October 2022
By Axiom Law

The recession is looming. How can your enterprise legal department navigate hiring freezes, minimize fixed spend, and continuously pivot in response to a fluctuating economic environment?

A recessionary economy is particularly disruptive to mid-large market enterprise companies, and here’s why: many enterprise legal departments are working with decreased budgets amid hiring freezes, yet at the same time, legal risks tend to only increase in a recessionary economy.

So how can GCs within legal departments at enterprise companies better navigate a recessionary economy for both their team and their business?

The answer is simple: shift costs from fixed to flexible resourcing.

Flexible resourcing allows GCs to better address the ebb and flow of the need for expertise

In a recessionary economy, many enterprise companies face hiring freezes. GCs of legal departments at companies that have put a hold on hiring are often conflicted and faced with the following dilemma: the department’s workload has increased due to expanding legal risks brought about by the recession, but they aren’t able to hire full-time staff to help handle the workload.

Some GCs don’t realize there’s a better option than hiring fixed headcount, even when the economic climate isn’t so grim. Because legal departments’ needs naturally ebb and flow over time, utilizing flexible resourcing better allows GCs to pivot and hire only for their current needs, as needed.

Flexible resourcing helps alleviate executive entanglement and promotes fiscal discipline

When GCs aren’t able to hire fixed headcount due to freezes, their first inclination is to send additional work to outside law firms, but there are some disadvantages to doing so. The first is cost. According to Law.com, some law firms “are looking to push aggressive rate increases in 2022, taking advantage of a climate in which surging demand for corporate work, in particular, has stretched them thin.” It was anticipated many firms would raise rates anywhere from five to ten percent, placing an even bigger financial burden on the legal departments that have traditionally relied on them to handle their overflow of work.

A second disadvantage to relying on outside law firms is that they may not even be able to handle the workload enterprise legal departments are handing off to them. The Great Resignation, or the Great Reflection as we like to call it at Axiom, has made it particularly difficult for law firms to hold onto their talent. “Law firms are fearful because of the hot lateral-hiring market,” according to ABA Journal. The founder of a law firm data company shared that many law firms simply “don’t have enough folks to go around and pick up all of that [commercial] work that’s floating around out there.”

Even if GCs are able to find a law firm that is able to handle their enterprise legal department’s overflow work (and afford the increased cost associated with utilizing their services), they end up getting so entangled in managing the law firm that it takes time away from the other, more strategic tasks they need to complete.

So what’s the best solution for enterprise legal departments as they navigate the recessionary economy?

Flexible resourcing.

Flexible resourcing is beneficial for enterprise legal departments, especially during times of economic uncertainty, because it allows GCs to avoid the exorbitant costs of sending work to law firms while better focusing on more strategic tasks.

Even though the legal hiring boom has slowed down, the market for talent is still tight. Flexible resourcing means talent is immediately available, even during a tight talent market, and operates as a true extension of the in-house team.

Learn more about how you can utilize flexible resourcing in Axiom’s step-by-step playbook for building a pre-recession flexible resourcing pilot program within legal departments in Axiom’s whitepaper, How Can Enterprise Legal Departments Navigate a Recessionary Economy?

How Can Enterprise Legal Departments Navigate a Recessionary Economy?

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Posted by Axiom Law