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Legal10 July, 2023

Bringing it in-house: insourcing activities for Corporate Legal Departments

In the past, outsourcing legal services and build the relationship with outside counsel was the norm. Now, corporate legal departments are bringing more work in-house to optimise their work and processes.

What are the driving factors of this re-assessment?

In the past, legal departments had a low volume of legal matters to deal with. Nowadays, in-house lawyers need to deal with a far larger volume of legal matters that also bring further challenges. Additionally, as technology and latest developments in AI currently enable legal professionals to automate and accelerate most of their repetitive and time-consuming tasks, decisions to in-source activities become even way more attractive.

Interestingly, “Fifty-nine percent of General Counsel believe technology offers significant or very significant potential for cost savings, far ahead of any other opportunities”, according to EY’s Law and Harvard Law School Center study conducted in 2021.

Insourcing has become a prominent trend in recent times also due to increasing cost pressures legal departments are facing. Given stringent legal budgets and the rising costs associated with outsourcing services, it comes without saying that in-house lawyers need to reduce outside counsel costs and internalise most of their work. In fact, 88% of law departments are planning to reduce the overall cost of the legal function over the next three years, EY reports.

In this context, law firms must now compete on multiple fronts to prove their cost-effectiveness and technological prowess to lead legal professionals relying on them. As legal departments must optimise and justify their costs, they have higher expectations on law firms in terms of efficiency and technology, thus creating a more competitive market for law firms.

In fact, according to the Wolters Kluwer Future Ready Lawyer survey 2022, 84% of CLDs (Corporate Law Departments) report to have become more selective about the law firm with which they do business.

Additionally, 90% of law departments report to face several challenges with outside counsel management, mainly associated with guidelines, resources, ability to manage many providers and lastly, lack of data and KPIs.

Legal departments are also making sure their external law firms are up to speed with the latest legal tools. In fact, 91% of legal departments also reveal that within the next three years it’s important that the law firms they rely on fully use technology.

Learn further insights and perspectives from CLDs regarding the factors driving them either to insource or outsource legal matters and processes by downloading the infographic.

INFOGRAPHIC: The changing balance of power between legal departments and law firms

Outsourcing or insourcing your legal matters and processes need a careful analysis.
This infographic illustrates the driving factors for outsourcing or insourcing corporate legal work.

Download the infographic
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