Law firms may lose company referral business if the predictions of general counsel (GC) surveyed by event management company IDEX Legal and information firm Thomson Reuters come true.
The two companies surveyed over 65 Indian general counsel (GC) and other senior counsel in March 2016.
74 per cent of the participating GC declared that they planned to decrease the use of external counsel over the coming 12 months.
Around 83 per cent stated that they intend to increase the size of their legal team over the next 12 months.
This finding isn’t a new trend – in 2015’s version of the survey, 56 per cent of the GCs had reported that their legal team had expanded in the last 24 months.
Law firm fee currently eats up more than one-third of the in house legal budget of the GCs companies.
Law firm allocations
Survey participants said that on an average 34 per cent of the total spend of their departments consisted of fees of engaging external counsel.
The largest share, 47 per cent of the budget, was spent on the in-house legal teams themselves, with the remaining budget going to “non law firm vendors” (see graphic below).
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In any case, it's an interesting finding that's not unsurprising...
Just saying. I am no expert. However, I can certainly say that in-house counsels will continue to pay external litigation counsel because they cannot handle litigation merely because they "know the facts".
@Kian - one assumption you may want to explore further is whether GCs have any discretion in the legal budget. Most companies impose across-the-board cost reductions in uncertain times, so couldn't care less what the specific dynamics of the legal team are. A company with a large litigation roster would obviously find it tough to cut costs beyond a point, similar to a very acquisitive one. The question therefore should be whether the GCs have been asked to reduce spend, not whether they intend to!
GCs/Legal heads are well aware of this phenomenon and building up their teams to get the work done at reasonable expenses.
GCs/legal heads may very well be aware of this phenomenon but if they wish to leave home at 5pm (along, of course, with weekends not working) and spend quality time with their wife / children then they will continue to outsoure work to law firms. In any event, anyone going up the ladder in a law firm would not leave to join in-house for no other reason but because its considered the easy way out.
You need to understand the commercial sense and changing scenario of in-house departments before forming any opinion.
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