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In-house teams grow to battle cost and regulation

In-house teams grow to battle cost and regulation

In-house legal teams are growing as companies attempt to rein in costs and tighten budgets, a new survey of 374 corporate counsel has revealed.

IN-HOUSE legal teams are growing as companies attempt to rein in costs and tighten budgets, a new survey of 374 corporate counsel across more than 20 industries has revealed. 

The new report by law firm Mallesons Stephen Jaques, produced in partnership with general counsel at NAB, AMP, Wesfarmers and Westfield, shows that cost pressures and increasing regulatory responsibilities are driving growth of in-house teams.

Survey respondents nominated cost reduction as one of the main drivers for the steady growth of their legal departments says the report, released today. 

Respondents expect this trend to continue and 94 per cent expect stable or increased in-house legal teams over the next three years.

However, the report's general counsel survey partners at NAB, AMP, Wesfarmers and Westfield, argued larger in-house teams do not automatically reduce costs. 

An equally effective approach is to maintain a relatively small in-house team of very senior lawyers who work closely with a range of firms depending on the nature and complexity of the work involved, they said. 

A heightened regulatory environment has also driven the size increase of in-house legal teams, according to the report. It said regulatory and compliance work ranks highly as one of the key responsibilities for corporate counsel.

Mallesons partners, Jason Watts and Joseph Muraca, led the project and say that corporate Australia has never had to rely on its corporate counsel as much as it does now.

"Given Australia's complex regulatory landscape, large organisations are increasingly depending on their corporate counsel, often requiring more than just legal advice. As a result, the in-house legal function is one of the few business functions to grow during and post GFC," said Watts.

Muraca said diverse responsibilities are putting increasing pressure on corporate counsel.

“From handling day-to-day legal work, to managing large teams, complex matters and stakeholder engagement, corporate counsel are stretched.  And with the rise of class actions and increased regulatory investigations, companies rely on corporate counsel more than ever to mitigate legal risk and protect directors who are increasingly in the firing line.

“Over 40 per cent of our survey respondents said they had been subject to a regulatory investigation in the past year,” Muraca said.

The survey partners suggest that increasing segmentation of the legal market has also contributed to growing in-house legal teams. 

"Sophisticated corporates are assessing what types of work can be more effectively and efficiently conducted in house, where industry specific experience can be developed by those with a deeper day-to-day knowledge of the organisation’s operations," they said. 

The prospect of future growth within in-house legal teams appears most likely in the mining industry where 70 per cent of respondents expect their legal teams to increase in size, with “business growth” stated as the key reason.

Mallesons' inaugural report, Compass 2011, focuses on the issues facing Australia's corporate counsel. Of the 374 respondents, 44 per cent were general counsel and 45 per cent were in the ASX 200.

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