Legal chiefs expect technology and product development, as well as new and emerging issues such as artificial intelligence, to be among the most in-demand practice areas during the next two years.

However, 70% of general counsel say they don’t have the in-house resources to handle emerging issues and 65% report a lack of in-house technology and product lawyers, according to a survey report from legal talent provider Axiom.

Additionally, 96% of GCs say their budgets were cut coming into 2024 and 80% are preparing for a headcount freeze in the next year, Axiom’s View from the Top report found.

These tight fiscal times could make it difficult for legal chiefs to staff up internally to comply with evolving regulations in the areas of AI, data privacy and cybersecurity.

Axiom General Counsel Ashlin Quirk said the financial restraints facing legal chiefs amid ever-growing compliance needs may prompt more of them to utilize flexible legal talent solutions in the coming months.

For example, she said the EU’s Artificial Intelligence Act is one emerging area where legal departments will likely need external compliance assistance.

“Everybody's going to need support figuring out how that impacts their business, their operations and any changes they need to make,” Quirk told Legal Dive. “But does everybody need someone to stay on full time and do that once you've got that compliance program in place? Probably not. So, I think a flexible solution is the best way when you don't necessarily have a full-time need for that particular practice area.”

Privacy and cybersecurity

GCs expect data privacy and cybersecurity to be the second most in-demand practice area in the next two years, according to the survey conducted by Wakefield Research for Axiom.

The regulatory compliance work in the privacy realm significantly increased with the approval of the EU’s General Data Protection Regulation and the subsequent California Consumer Privacy Act.

Additional U.S. jurisdictions have passed their own laws in recent years, and two prominent federal lawmakers have proposed the American Privacy Rights Act in hopes of eliminating “the existing patchwork of state comprehensive data privacy laws.”

Nonetheless, 47% of legal departments have no data privacy and cybersecurity lawyers on staff, an Axiom press release about the GC survey report said.

Quirk said hiring individuals with data privacy or cybersecurity expertise can be expensive, so in-house teams may decide to turn to flexible talent for support with those practice areas as well.

“You may not need a full-time privacy resource,” Quirk said. “You may need someone to assist with a certain area of your business, a certain product or a privacy-by-design review.”

Legal departments could also turn to outside counsel for assistance, and the Axiom report notes that 97% of GCs say they used a law firm last year. 

More than half of the surveyed legal chiefs said they utilized external firms due to a lack of in-house capacity or specialist expertise. 

GCs will consider whether to tap law firms in a climate where the largest U.S. firms charged nearly $1,000 an hour on average through most of 2023, a Brightflag report found. 

At the same time, legal departments saw their budgets cut an average of 11%, Axiom reported. Nearly nine in ten GCs (87%) are concerned about their ability to invest in the necessary talent and resources they need.

Professional development challenges

Quirk, who joined Axiom last year, highlighted that legal chiefs like to develop some expertise internally in different practice areas, but budget cuts can make doing so difficult.

Quirk provided an example from her time serving as the general counsel in her prior role at a multinational data insights company.

She said there was a period in recent years when her legal team lost a colleague who left to become a GC at another organization and was not able to replace them with a new full-time equivalent given budget constraints. The internal lawyer’s departure resulted in some of the additional work being spread around internally.

During that period, one of Quirk’s remaining team members asked if the company could support him pursuing additional professional development in the area of information privacy.

Quirk said that while she wanted to approve the request, she did not feel that she could because the time away from work it would have required.

“I was like, ‘I would love to say yes to this, and I just don't think I can,’” she said.

General counsel also may be more reluctant to have team members rotate roles to gain exposure to new areas in the current budgetary climate, according to Quirk.

One reason legal chiefs may delay that type of professional development is because training someone to get up to speed in a new practice area can slow efficiency, which is a priority when legal teams are expected to do more with less.

“Trying to find that balance between getting the business needs met and also meeting your team's needs I think is a bit of a tightrope right now,” Quirk said.

Optimistic mindset

Axiom’s GC acknowledged the company’s survey report based on responses from 300 GCs in the U.S. earlier this year includes many gloomy statistics regarding legal departments.

But she said a recent webinar she hosted featured general counsel sharing that tough budget times also present in-house legal teams with the chance to innovate.

Two areas where Quirk expects to see new approaches are in how legal departments utilize technology and outside legal talent, which she said could help them better serve their internal clients amid a tight financial environment.

“It's given us all an opportunity to sort of rethink how we approach things in a way that's exciting,” Quirk said.