Firms face dearth of work as clients cut spending
The UK's top companies are set to cut back on the amount of legal work sent to external advisers and retain work in-house, according to Legal Week research. Legal Week Intelligence's (LWI's) 2008 Client Satisfaction Survey has found that more than a fifth of companies (23%) are planning to scale back the amount of work they send to private practice firms over the next year, with that figure increasing to 28% within the FTSE 100. The report, which is based on data from 317 companies, including 54% of the FTSE 100, found that the proportion of legal work outsourced by FTSE companies has fallen in recent years - dropping from 51% to 42% over the last five years.At the same time, in-house departments have grown year-on-year since the first satisfaction survey in 2004. Some 38% of respondents said their legal teams expanded over the last 12 months, with half of the FTSE 100 boosting capacity.
January 22, 2009 at 08:03 AM
3 minute read
Clients batten down the hatches as downturn continues to bite
The UK's top companies are set to cut back on the amount of legal work sent to external advisers and retain work in-house, according to Legal Week research.
Legal Week Intelligence's (LWI's) 2008 Client Satisfaction Survey has found that more than a fifth of companies (23%) are planning to scale back the amount of work they send to private practice firms over the next year, with that figure increasing to 28% within the FTSE 100.
The report, which is based on data from 317 companies, including 54% of the FTSE 100, found that the proportion of legal work outsourced by FTSE companies has fallen in recent years – dropping from 51% to 42% over the last five years.
At the same time, in-house departments have grown year-on-year since the first satisfaction survey in 2004. Some 38% of respondents said their legal teams expanded over the last 12 months, with half of the FTSE 100 boosting capacity.
Richard Wiseman (pictured), general counsel for M&A and project finance at Shell, told Legal Week: "If you have a legal department that is technically capable an obvious way of reducing costs could be to keep more work in-house. The in-house team will work at a fixed cost."
McDonald's UK general counsel Della Burnside said: "It is not just about bringing down spending – ensuring proper risk management is a reason in itself to bring more work in-house. What you need is an overarching understanding of the business and you can educate lawyers much better on this in-house."
However, the research also found that, while clients continue to predict they will reduce their legal adviser rosters, the average number has remained almost static over the last five years.
While 17% of companies said they plan to cut the number of firms instructed, the average number of law firms used by FTSE companies has increased from eight to nine since 2003. Similarly, while panel use continues to expand, many clients do not strictly enforce them.
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