Red tape and healthy commercial markets are driving major companies to stock up their legal teams, according to new research, with general counsel increasingly hunting for specialist lawyers to beef up their departments' capabilities.

Fifty-six percent of respondents to this month's The Verdict survey said they expected to broaden their internal legal teams in the next year, while 42% said their teams would stay the same size. The Legal Week survey, conducted with Davies Arnold Cooper, found only 2% of corporate counsel predicting that their team would get smaller.

However, finding the right lawyers to bolster an in-house team is not getting any easier, particularly for general counsel hunting for talent in high-demand specialist areas.

More than half of the respondents said they currently found it more difficult to hire specialist lawyers than general lawyers, including 25% who said it was 'a lot more difficult'.

One senior in-house lawyer at an international media group said that the current escalation of private practice salaries was making it tough to recruit experienced staff.
He commented: "Attracting good quality lawyers, particularly at a higher level, is becoming difficult due to the substantial cut in salary that they would have to take."
Vivienne King, head of legal at The Crown Estate, argued that it takes a particular career focus to prompt a move in-house. She said: "There is more money in private practice and any lawyer, whether specialist or generalist, has to have a business mindset to want to go in house."
Some legal chiefs concede that the tight labour market for lawyers is making it hard to attract the small pool of commercially-minded lawyers who typically thrive in house.

Elliot Laurie, a senior in-house lawyer at building products company Hanson, said: "Lawyers who are in private practice do not necessarily have the right breadth of expertise. Most private practice lawyers tend to specialise at an earlier stage in their career, so it is difficult to find appropriate lawyers for the more general in-house role."

Canary Wharf group legal counsel Martin Potter told Legal Week: "We have recently been trying to recruit a specialist lawyer and have found it much more difficult than we did in August last year. It is par for the course – people are trying to keep hold of specialists in anticipation of a big run on legal services."
However, it is accepted that bluechip firms with strong brands still have access to a considerable pool of talented lawyers who have decided to leave private practice. Likewise, such companies are able to build up considerable in-house specialist skills.

One respondent said: "In-house roles used to be for generalists, but an increasing amount of specialists are seeing it as a sensible move – especially in big organisations where the legal function is as large and as complex as a small law firm and there are defined roles for specialists."
When asked what areas in which they were considering expansion, commercial/contracts was by far the most popular, cited by 75% of all respondents as a key growth area.

Other disciplines that rated highly as areas for expansion were intellectual property (26%), corporate (22%) and employment (19%). Only 5% cited property as a potential growth area.

Regardless of the size of their teams, general counsel remain determined to keep as much of their work in house as possible. Fifty-six percent of respondents said they estimate that less than 20% of their workload will be sent to outside counsel in the next year. Twenty percent said that they would send out a significant proportion (up to 40% of their work) and 13% said they would outsource more than half of their work. Only one in 10 said they would send out more than 60% of their workload externally.

Likewise, the growth in regulation and the impact of set-piece governance legislation such as the forthcoming Companies Bill are expected to drive the growth of in-house teams in the coming years.

One respondent summed it up: "Regulation will drive the expansion of in-house recruitment in the short term." N