The legal landscape for general counsel (GCs) in the United Kingdom is undergoing significant challenges and transformations in 2024. A comprehensive survey conducted by Wakefield Research and commissioned by Axiom provides crucial insights into the current state of in-house legal departments, shedding light on budget constraints, talent management issues, and the quest for innovative solutions.
Budgetary pressures and resourcing challenges
Budget cuts have become a common theme for UK GCs, with an average reduction of 12% in legal department budgets. This financial tightening has left 95% of GCs feeling critically understaffed, exacerbating their capacity to perform effectively. The economic volatility has heightened concerns, with 90% of GCs fearing they will not be able to invest in the necessary talent and resources needed to navigate the complex legal and regulatory environment in 2024.
The talent conundrum
The resourcing challenge extends beyond budgets to the talent pool within legal departments. A significant 95% of GCs report inadequate staffing levels, which severely impacts their ability to handle both legal and administrative tasks efficiently. Additionally, turnover rates have increased, with 87% of GCs anticipating a hiring freeze, further complicating the talent acquisition landscape.
This staffing shortage has led many GCs to rely heavily on external law firms. In 2023, 99% of GCs engaged law firms to manage an average of 28% of their company’s legal matters. However, this reliance is fraught with dissatisfaction, as 99% of those who outsourced work regretted aspects of the engagement, particularly due to the lack of prioritisation of their business needs and insufficient practical advice.
Balancing values and budget constraints
One of the critical dilemmas faced by GCs is the balance between upholding core department values and managing within tight budgetary constraints. Approximately 27% of GCs have already felt forced to prioritise budget over values, and 51% foresee having to make similar compromises if the economic situation worsens. This tension underscores the need for innovative solutions that align with both budgetary requirements and organisational values.
The push for innovation
Despite the challenges, there is a strong drive among GCs to adopt innovative strategies to mitigate the impact of budget cuts and resource constraints. Modern solutions such as advanced legal technologies, alternative legal service providers, and flexible legal talent are being explored to enhance efficiency and reduce costs. The survey revealed that 85% of GCs would prefer to outsource legal matters to flexible legal talent providers if they could do so at a lower cost while maintaining high-quality standards.
Furthermore, the adoption of alternative fee arrangements (AFAs) with law firms has become more common, with 69% of GCs reporting the use of AFAs in the past year. However, these arrangements are not without their challenges, as 100% of GCs who were offered AFAs experienced difficulties, including reduced service levels and the complexity of benchmarking costs.
The road ahead
The survey highlights the necessity for GCs to rethink traditional resourcing strategies and embrace new models that leverage technology and modern legal service providers. This evolution is critical for achieving the flexibility, productivity, and efficiency required to navigate the increasingly complex legal landscape.
In conclusion, UK GCs in 2024 are navigating a challenging environment marked by budget constraints, talent shortages, and the need for innovative solutions. By addressing these challenges head-on and adopting new approaches, GCs can better manage their departments and support their organisations effectively, even in the face of economic uncertainty.
For more information, please contact
Daniel Hayter, managing director and VP of Europe, Axiom Law
www.axiomlaw.com
