Rising demands on businesses to cuts costs will see general counsel dramatically re-engineer their legal functions over the next decade, according to new research from Oxford University's Said Business School.

The report was compiled from interviews with fifty-two general counsel from a range of bluechip businesses in the US and the UK, including Citi, BP, Barclays, Goldman Sachs, Shell, HSBC and Sony Ericsson.

Key findings from the research, compiled by Said management studies professor Mari Sako, include the assertion that GCs are increasingly looking to slash legal spend through what she refers to as a "production line" approach.

Sako states: "The corporate cost pressure to 'do more with less' has led many general counsel in this study to consider a production-line approach to legal service delivery… a handful of general counsel, led by internalisers, have appointed directors of legal operations to take a lead in implementing the production-line approach."

The research also highlights a trend of shrinking external legal panels in recent years. Sako cites a number of case studies to illustrate this point, including four companies which five years ago operated legal panels with upwards of 50 firms but have since reduced the number of advisers they work with by 70%-90%.

The report also cites three further examples of businesses at which the number of in-house lawyers shrunk significantly in conjunction with an increase in the average amount of legal work handled in-house.

In one particular case, the proportion of legal work handled in-house rose from 21% to 80% over five years, while at the same time the number of in-house lawyers was halved from 30 to 15.

Sako quotes one GC at a financial institution as saying: "A result of having more in-house lawyers is that you are creating more external spend. So the more activity you're creating through that operating model, the more there is a sort of on-cost of doing external business."

In the afterword, legal consultant Richard Susskind states: "It is clear that some GCs think they themselves should drive innovation; but a larger proportion think that law firms should be leading the way.

"Many law firms seem hesitant about this. Yet, in the history of industry and commerce, customers or clients have rarely redefined the services they receive or the markets of which they are part. That is the job of the provider."

Click here to read the full report.