Adding headcount in-house won’t fix ‘unmanageable’ workloads
Understanding and intelligently reallocating legal spend is a key issue for in-house legal teams and general counsel across the country. But as these lawyers confirmed, there are a number of ways to manage the unmanageable.
As in-house legal teams are forced to do more with less and continually drive efficiency, general counsel have expressed concerns about the pressure and workloads in the current legal market.
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In fact, according to LawVu’s 2023 In-house Legal Technology Report, released earlier this year, workload and burnout were among the top challenges faced by in-house teams.
LOD senior legal counsel Helena Kolenbet also told Lawyers Weekly earlier this year that cost-cutting is also something that is ranking consistently high on the agendas of legal departments on Australian shores.
“Legal teams do feel the pressure because you’re a cost centre of the business, and as such, there is increasing pressure to do more with less. So, the ability to prioritise as a member of the legal team is quite challenging because you’ve got your stakeholders that have what’s hugely important in their world, which may not necessarily be aligned with the priorities of the legal team as a whole,” she said.
“Because as a legal team, you are at the centre of the organisation, you have visibility across what the organisational priorities are, but that’s not to diminish the importance of what’s going on with your individual stakeholders because what they’re sending to you and what they need from you is at the crux of what they need to be able to do to function.”
Modaxo senior legal counsel Emilie Franklin echoed this sentiment – particularly with a potential recession on the horizon.
“In today’s legal landscape, in-house teams are under increasing pressure to manage their legal spend efficiently, although companies continually expect more from their in-house lawyers, pushing them to handle a wide range of legal matters. We have to balance these increasing demands with the ever-changing commercial cycle, and sometimes getting approval for new people is difficult. As a result, we are actively adopting technology to boost efficiency, but we’ve also become adept at using data to evidence our value,” she said.
“While each in-house team adapts differently to these challenges, a common approach involves a blend of technology adoption and occasional resource augmentation. This balanced strategy allows teams to meet cost-control objectives while still delivering high-quality legal services in these evolving times. Technology, such as contract management systems and AI tools for contract reviews and compliance, have emerged as a cost-effective way to enhance operational efficiency without the need to hire more staff.”
Similarly, Law Squared founder and director Demetrio Zema emphasised that “adding headcount” can no longer make the unmanageable manageable.
“In-house legal teams often establish and run themselves like mini law firms, based on the same structures, processes and systems familiar from private practice experience. But this approach tends to stifle more innovative team structures, ways of working and engaging with stakeholders, and often determines how the teams leverage external providers (including external law firms),” he explained.
“I have met with a countless number of GCs in Australia and the United Kingdom this year, and they have told me, almost unanimously, that adding headcount is no longer the answer to managing the ‘unmanageable’. Not only are experienced lawyers prohibitively expensive in the current market but even after months of searching, they wind up compromising on candidates who have only a subset of the aggregate legal skills required by the in-house team (and business as a whole) to meet the volume and complexity of work coming in.”
Sydney Fish Market general counsel and head of property Michael Guilday is currently seeing a “more cost-conscious approach to the procurement of external legal services” in his work.
“This is being driven in part by a relentless focus on improving efficiency, as well as more challenging conditions being experienced for our business more generally. However, the problem is that the costs of doing business tend to be increasing across the board, and law firm costs are certainly no exception. Also, the risk profile for our operations is becoming more complicated and unpredictable.
“This means I am constantly on the lookout for ways of more efficiently managing external legal spend but without compromising on the quality of service. Some of the strategies I have adopted include shifting legal work to lower cost providers and being more circumspect about briefing work externally,” he said.
“For example, my external lawyers recently briefed several junior barristers to undertake much of the heavy lifting on a series of litigation matters, including in relation to the preparation of witness statements and engagement of technical experts. Technology has had a part to play here as well, as we have also utilised e-discovery software to speed up the process of identifying relevant information and sourcing historical documents.”
From Mr Zema’s point of view, GCs should first “improve the visibility of their legal spend” rather than rushing to recruit
“By deepening their understanding of where legal spend is going (i.e., to which vendors, and on which matters and categories), then probing those spend patterns, GCs can make more informed, data-driven decisions about spend (re)allocation.
“My bet is that those spend patterns will highlight two quick wins for GCs. First, investment and adoption of robust legal ops and technology will increase efficiencies and almost immediately reveal ‘low-hanging fruit’ for spend and resource optimisation,” he added.
“And secondly, a pattern of over-reliance on traditional external firms, secondee or contractor models to cover basic BAU tasks. This type of work could be far more cost-effectively achieved by innovative engagements with firms, like Law Squared, [which] offer a scalable solution for accessing always-on legal support from a broader spectrum of legal specialists, particularly in those areas of emerging risk for the business, such as privacy and data protection, cyber insurance and legal technologies.”
Looking to the future, Mr Guilday predicted an increased amount of variety in support for in-house lawyers.
“Looking ahead, I can see so-called alternative legal service providers or ASLPs playing a more active role in supporting in-house legal teams. Typically, this might involve having non-lawyers undertake work which was previously undertaken by junior lawyers,” he said.
“The aim is to have legal projects carried out by a range of people with different skill sets, including non-lawyers with technology expertise, albeit at a lower overall cost base than a traditional law firm.”