Anyone wondering whether their organization needs to hire a law firm knows the answer: Law firms will always have a place in the legal ecosystem for bet-the-company matters. But those matters are more rare than commonplace. And those law firms often come with hefty price tags and lack an operational understanding of clients. They very well might need a law firm on retainer and they might need one for exceptional matters.
But are law firms the only answer?
A wealth of financing challenges
On the business side, commercial leaders are dealing with problems like sharp shareholder and regulatory scrutiny, a volatile economy, supply chain issues, and more — all of which threaten their efforts to maintain profit. In-house counsel are at the center of a tug of war between protecting their organization against escalating jeopardy and the need to support its fiscal goals. Legal’s role has become more and more prominent, therefore, in navigating the corporate response to emerging risks and market opportunities.
Law departments can’t just cut back – they’ve been getting busier and busier. Post-COVID organizational change, evolving labor and employment norms, business and regulatory risks, and spiraling data volumes are just some of the everyday challenges.
Nor can they just hire their way out of their workload: Not only are full-time employees a costly option, but the Great Resignation has drained the talent pool to such an extent that firms are being drawn into expensive competitive wars in their attempts to attract and retain well-qualified attorneys.
Substantial budget cuts were anticipated by 88 percent of more than 2,000 GCs surveyed in a 2021 EY Law and Harvard Law School Center on the Legal Profession survey. And CEOs of companies with more than US$20 billion in annual revenue were expected to mandate legal departments to reduce costs by 118 percent, despite the growing scale and scope of the legal department’s activity.
This leaves legal leaders with a shrinking set of options even while they need to deliver better departmental agility in the face of unknown risks while helping them scale their approaches to known legal obligations. The best option is for them to take a hard look at their resources — full-time employees, external law firms, and legal service providers — and map out how each can be optimally used to address their different requirements.
Get the full paper.