Dive Brief:

• As part of their efforts to control costs, two-third of legal departments are bringing more work in-house, according to a survey report.
• Other leading cost-control strategies include shifting work from larger to smaller law firms (39%) and leveraging AI and other technology (33%), the survey of 373 in-house legal professionals in the U.S. found.
• One in four respondents expect to decrease the number of outside law firms they engage in the coming year and 14% expect to work with fewer alternative partners and vendors, according to the report from the Association of Corporate Counsel and Everlaw.

Dive Insight:

The survey results indicate bringing more work in-house remains a priority for a wide swath of legal departments, particularly as budgets are tight. 

The 66% of departments who are insourcing to control costs is up from 59% a year ago and is by far the leading strategy.

Respondents in 69% of small companies and 67% of mid-sized companies say their department is bringing more work in-house. 

Those numbers were markedly higher than the 58% of respondents of large companies who say such a strategy is being deployed.

Beyond lowering legal costs, a majority of respondents say insourcing work generates value by leveraging internal expertise and providing improved cost predictability.

As for other cost-control strategies, 41% of professionals from large organizations say their department is expanding the use of alternative fee arrangements with outside counsel. This is higher than the 28% of respondents overall whose legal teams are implementing that tactic.

Only one in ten respondents say their in-house team is shifting work from law firms to alternative legal services providers to reduce costs, according to the report.

Law firms

While 25% of in-house respondents expect to decrease the number of law firms they work with in the coming year, nearly seven in 10 (68%) expect no change in the amount of firms they engage. 

Just 8% expect to increase the number of law firms they work with in the coming year.

The report found that in-house teams are either extremely or somewhat satisfied with law firms in the following areas: quality and responsiveness of communication (76%), collaboration on key strategy (70%), understanding of company objectives (63%) and project management (51%).

Less than half of legal departments are satisfied with law firms in the areas of transparency into processes (45%), transparency into cost (42%) and cost predictability (38%).

Of those respondents whose legal departments plan to reduce the number of law firms their department engages, 79% cited cost effectiveness as a rationale and 40% listed efficiency and timeliness.

In a given year, 39% of respondents work with an average of one to five law firms and 26% work with six to ten firms.

Additionally, 15% of respondents work with 11 to 20 law firms and 13% work with more than 20 firms.