Legal Business Blogs

Comment: More for more – growing pains and questions as in-house comes of age

Confident. That’s the mood as Legal Business conducts its second annual poll of in-house counsel. For all the talk of the ‘more for less’ agenda, our special illustrates that there is robust demand for legal services at most sizeable companies and that the growth story of corporate legal teams continues.

More than two thirds of responding in-house legal teams have seen growth over the last five years. Law Society figures underline the wider extent of that growth with the in-house profession growing by 137% between 2001 and 2011. Law firms continue to feel the pinch in part because in-house teams have become determined to retain matters internally.

Another headline finding: law firms have to a considerable extent listened to client demands on value and service; over 90% of clients believe their advisers offer good or fair value, while 81% believe their advisers are appropriately staffing their matters.

While hourly billing remains a common model, fixed fees per project – which are regularly used by 66% of survey respondents – have rapidly been adopted in recent years. That’s more than you can say for success fees – law firms may like to talk of value-based billing but our research clearly indicates that clients just want to put a lid on fee inflation, period.

Such has been the ascent of the in-house counsel during the last five years, the question on the minds of some is how far can general counsel (GCs) build their empires before CFOs start asking awkward questions? It is plainly an issue. The clout and calibre of in-house lawyers has risen at major companies over the last decade but ultimately their sponsoring employees are not in the legal services game, so merely relying on goodwill is a shaky foundation.

Being on hand when senior executives face personal liability has finally given some reality to the consigliere image that GCs for years hopefully peddled.

But in larger regulated industries, the rising burden of red tape and regulatory exposure looks to offer much more long-term solid support for the medium-term expansion of the in-house profession.

Risk also appears to offer a hint to the evolution of in-house. Managing transactions doesn’t seem to give GCs much clout. But being on hand when senior executives face personal liability issues has finally given some reality to the consigliere image that GCs for years hopefully peddled.

If there is a solid basis to in-house growth, the question is: where do they go from here and how much can they sustainably build up specialist legal teams? There is also the thorny issue of training and career development. GCs understandably complain about paying to train junior lawyers, but there is some hypocrisy given that in-house teams benefit when they recruit associates and do so little themselves to train the next generation.

Teams are still largely flat and a lack of succession is a particular gripe of GCs, who bemoan the lack of career development they can offer. While law firms can’t just rely on the old pyramid model in future, conversely maybe in-house teams need to get a little more hierarchical. After all, the more people want to go in-house, the more you need a greasy pole.

For more statistics and analysis of the buy side story see Legal Business In-house Survey 2013 here