More than half of GCs face budget cuts and almost a quarter have cut their in-house team internal headcount, a new survey has found.
According to the study, 56% of GCs were affected by budget reductions, with 24% of those GCs had their legal teams reduced. The study, by Ashurst titled ‘Riding in the winds of change’ analysed the views of over 50 GCs and senior executives during sit-down interviews.
It may come as no surprise for those in the financial services sector, with in-house staff at Lloyds Banking Group facing job cuts while Royal Bank of Scotland aims to reduce operating expenses by £800m as outlined in its 2015 annual report.
Ashurst Advance director Mike Polson told Legal Business cut backs have affected in-house teams across the board. ‘It’s remarkably consistent across different geographies and different sectors. Challenges in areas such as regulation have been felt keenly in financial services, but actually most sectors talked about increased regulation coming through. Most indicated it was going one way; they’ve got more and more work to do and weren’t getting any increased resource to do the work with.’
Any hope companies would bulk up legal teams following the uncertainty of incoming regulation were dashed by the survey’s findings, with those interviewed looking for new ways to improve efficiency beyond the legal profession. Polson (pictured) added: ‘You’ve taken that traditional model and you’ve made that efficient as it can be by looking at what should be done in-house and what can be done externally. Now, it’s really about what new approaches and what new ways of working there are to tackle this rather than looking at the traditional model of what can be done in-house and what needs to be external.’
The study found the top three efficiency strategies adopted by in-house legal teams were taking a more innovative approach to technology, a focus on increasing efficiency of resources including the unbundling of matters and using firms with the resources to cover all matters, and improving the project management skills of in-house teams in a push to ensure complex matters can be dealt with internally.
The findings mirror a 2013 study by KPMG, ‘Beyond the law – how General Counsel are turning risk to advantage’, which found more than 90% of those 320 GCs interviewed for the project saw the volume and complexity of regulation as their greatest organisational risk.