There’s no question that being an Australia-based GC is hard. The results of Axiom’s first annual survey of 300 Australia-based GCs across a wide range of industries reveal that the job is only getting harder. Not only must Australian GCs address matters for which they have a dearth of in-house expertise, they must also manage a complicated network of expensive law firms. The resourcing required to achieve best-in-class legal outcomes is, in a word, insufficient.
While the volume and complexity of legal matters grow, Australia-based GCs are seeing their budgets shrink. Hiring to gain additional support has always been difficult, but it’s now nearly impossible due to headcount reductions. Belt-tightening is not only impacting the ability to hire, but spend cuts are also upending the use of law firms given their historically large 2023 rate increases.
This isn’t — or at least shouldn’t be — news. GCs across the globe are struggling to do more with less. The Australian legal leaders we surveyed are all in the same boat, amidst a storm that’s testing the ship’s seaworthiness. As a result, the three headline takeaways from our survey resemble findings we have seen in our surveys of peer GCs around the globe. Still, they are no less notable or concerning. Australian GCs are:
- Struggling to navigate budget cuts and hiring freezes: GCs believe budget constraints will ultimately affect the efficacy of their already under-resourced department. Many believe the cuts will be deep and the freezes imminent.
- Skeptical that either law firms or internal hires can, alone, address their resourcing challenges: Why? First, it’s the high costs associated with both. Costs aside and specific to internal legal talent, these GCs also note the tremendous difficulty finding and hiring the right talent to meet their needs.
- Unhappy with their careers: They are stressed and dissatisfied, citing an unmanageable workload and poor work-life balance.
The intent behind this survey report, however, is to dig deeper. We want to explore the pain points, concerns, and findings behind these headlines. If budget cuts are impacting the legal team – where and how exactly is that impact felt? It’s not enough to understand that GCs feel under-resourced; we want to identify where, specifically, they feel a lack of expertise or bandwidth and how they anticipate those needs will change over time.
Australia-Based GCs are Struggling to Do More with Less
As with their global peers, Australian GCs are facing a parallel crisis of budget cuts and increasingly complex workloads. Seventy-two percent of GCs say their legal budget has been cut as a result of economic conditions and ongoing volatility. On average, Australian budget cuts represent 4% of company revenue – which in real dollars is significant. Australia-based GCs have seen their budgets shrink by $4.3M AUD. This is despite the fact that 85% of Australian GCs report their department is seeing an increase in both the volume and complexity of legal matters.
These compounding issues create a perfect storm for GCs struggling to maintain a team capable of doing more with less.
Perhaps more alarming, it’s not just that legal departments are generally understaffed, requiring team members to pick up more work. Instead, it’s that many GCs don’t feel their team is capable of being successful with what they have available to them – more than one-third (38%) of Australia-based GCs feel they do not have the right legal expertise on their team to address current or anticipated legal needs.
Why More In-House Hires Won’t Work
So, budgets are shrinking, workloads are rising, and in-house expertise is lacking. Unfortunately, Australian GCs can’t just hire their way out of trouble – and they know it: Only 21% call hiring additional full-time lawyers a mostly/completely appropriate solution to address their resourcing issues. Why? There are a few reasons.
First, you will remember that 61% of Australian GCs anticipate a mandated hiring freeze this year, making hiring a nonstarter. But even if it were a budgetary option, most GCs surveyed (92%) reported difficulty finding and hiring the right lawyers to meet their needs. Second, we know that hiring permanent, full-time lawyers does not address current or anticipated expertise needs across a variety of focus areas. And, even when hiring in-house lawyers might address expertise needs, it doesn’t necessarily do so efficiently, given the GC would be hiring permanent headcount for what may only be a part-time or transitory matter.
Third, permanent headcount is expensive. In fact, the majority of Australia-based GCs (62%) cited cost as the primary reason full-time hires are not an adequate response to resourcing needs. These GCs correctly understand the often overlooked fully-loaded expense of permanent hires. Indeed, salary and bonus alone are a woefully insufficient measure of cost per full-time hire, leaving too many GCs in the dark on this metric.
Employing full-time support involves a host of variables in addition to salary and bonus, including equity-related costs, benefits and taxes, bar association fees, facilities and related overhead costs, training and development expenses, hiring and recruiting, exit spend, and more. Other factors such as geographic region within Australia, industry experience, tenure and practice area also substantively influence spend per hire.
Even when taking all of the above – cost, lack of quality talent, inability to address in-the-moment needs – into account, there are still more substantive reasons that Australian GCs are wary of investing in additional full-time support.
The Inefficacy of Law Firms
When “staffing up” doesn’t work, GCs look to “send out” to law firms. But, while law firms may once have been the go-to resource for legal teams needing extra help, only 23% of Australian GCs say they are a completely/mostly effective solution for their current concerns. Why?
Once again, for GCs trying to control costs in an inflationary environment, law firms have simply become too expensive (at least, according to over half of Australia-based respondents). It’s a problem that’s only getting worse.
Globally, law firm clients expect rate increases between 5-15% in 2023, with some firms expected to hike rates by 30%+. Accordingly, a recently released Wells Fargo report found that 98% of law firm leaders are planning the largest rate increases on record since the report’s inception 15 years ago.
GCs believe that these rate hikes are not only a real problem; they’re also indicative of a symbolic disconnect between law firm and in-house leaders. Per our survey findings, many GCs are now operating in a cost-reduction environment marked by hiring freezes and CEO-mandated budget cuts. Law firm rate increases are not only out of step with economic forecasts, but they’re also totally out of touch with client pain points –making law firms part of the GC’s problem, instead of part of their solution toolkit.
While cost may be the GC’s primary problem with law firms, it is not the only issue that makes Australian GCs skeptical about doubling-down on their firm spend.
Addressing GC Career Dissatisfaction
It’s clear the role of a GC is a difficult one and the current economic climate certainly isn’t helping. What may be less clear is just how “unmanageable” Australia-based GCs’ jobs have become. Almost half of respondents report being dissatisfied in their career, and almost all (96%) report feeling stressed. In addition, most GCs (61%) do not feel like they are respected by peers as a strategic business partner, and an overwhelming 95% say their inability to demonstrate value to management (in real economic terms) is contributing to their dissatisfaction.
Notably, among the Australian GCs who do feel valued by the business, most (72%) report strong partnerships with the CFO and business/functional unit heads. Those partnerships, they believe, add to their reputation as a strategic thinker and business enabler, rather than just a risk mitigator. In addition, most contented Australian GCs feel like management gives them a wide berth to design their ideal legal department structure and choose their law firm or more progressive partners independently. Unfortunately, most GCs (65%) don’t feel that sense of autonomy.
These statistics are leading to GC departure. Seventy-one percent of Australian GCs are open to finding a new position, including the 26% who are actively looking. Additionally, 32% of those who are not yet currently looking say they are highly likely to do so in the next year.
Where are they looking? Perhaps unsurprisingly, based on current concerns with work-life balance and corporate culture, many are looking to leave the law altogether. Many others are looking to assert more autonomy over their legal careers by joining flexible legal talent providers.
But there is another important group: the 24% seeking the same position, just in a different environment. It’s unwise to rely on inertia to keep them in roles—with hiring talent proving difficult, there is a risk that head hunters may successfully poach in-demand lawyers. These are the flight risks that can be retained if employers attempt to understand and address their pain points.
And for 79% of Australia-based GCs, their most acute functional pain point is trying to manage an “unmanageable” workload. They need support – the kind of support they believe is unattainable given dwindling resources and headcount freeze; the kind of support that is unaffordable in the traditional “staff up or send out” paradigm.
Flexible talent providers and elite ALSPs, however, can provide these GCs with high-performing legal staff and lawyers in Australia they wouldn’t otherwise be able to hire. As a result, GC “flight risks” may be more tempted to stay if empowered to invest in agile legal resourcing strategies that truly support legal team demands without exhausting the legal budget.
Get the full report.