44% of in-house lawyers say that their legal spend for 2020 and 2021 will decrease due to the pandemic, RollOnFriday's survey has found. Our poll of over 130 in-house lawyers found that only 19% thought their spend would increase over the coming year and a half, with 37% predicting legal spend would stay the same.


In-house chart


Of the 44% of respondents who predicted that their legal spend would be decreased, a large portion referred to budget being reduced across the board. "The firm is cutting external spend in all areas, so external legal advice is no exception," said one in-house lawyer. Some companies are bringing in tighter restrictions for signing-off bills, with one in-house lawyer confirming that "any legal spend now has to be approved by the global head of legal", and another saying, "I can still instruct, but I have to break the glass and set the alarms off to do it, so I must choose very wisely."

Others highlighted that their team was making a conscious effort to "bring as much work in-house as possible", rather than farm it out. Consequently, an in-house lawyer said they were "upskilling" their team. But another said their in-house lawyers would now have to deal with legal tasks "even if is well outside their skill level". One respondent pointed out a key financial reason to keep work in-house: "Anything that can be done in-house will be done in-house - I don't want one or two instructions to equate to someone's salary who gets the chop".

Many pointed to a dip in M&A work. "We'll do fewer deals this year, which will more than offset legal spend on refinancing/equity injections etc." said one in-house lawyer. "Big new shiny projects, the type of work that requires external counsel, have been pushed back or further down the list," said another respondent.


Hero man

The office flight suit prototype will have to wait another year.


19% of respondents predicted an increase in legal spend, with a rise in disputes being cited as a key reason. "As an insurance company, we often see an increase in litigation when times are hard," said one respondent. "We are likely to see more conflict and greater need for external legal advice as a consequence of the turmoil, similar to 2008," said another.

It's not just litigation lawyers who can expect to be busy. Other in-house lawyers said they would require advice on areas such as "remote AGMs, investments that need restructuring, disposal of assets, reinvestment of assets, and regulatory risk." While one respondent in financial services said that some of their clients were now impatient to get deals done: "We are seeing a lot of demand for funding with the current downturn, and deals that have been simmering for the past year in negotiations have suddenly become urgent to close for our customers."

Another respondent saw an increase in legal spend for "Ongoing regulatory and political market-wide matters" such as LIBOR. 

One in-house lawyer pointed to their team having to play catch-up due to the pandemic: "Losing internal hours to furlough etc. has hit preparations and so there is a likelihood that more outsourcing will happen." Another respondent said that a freeze on hiring-spend for their team "perversely" meant "more work will likely be pushed to external counsel as in-house lawyers are overstretched." 

Of the 37% who said that legal spend would stay the same, many pointed to a mix in the work they did. One respondent said: "Whilst certain projects have been delayed or put on ice, there are a number of new ones, so our spend is likely to stay the same." Another said that they anticipated "less deals but more project work."

One in-house lawyer in financial services thought their legal budget would remain the same; highlighting a trusted source of income for law firms in recent times: "We, like all others in financial services, are looking to cut costs but there are regulatory challenges which will require external legal support. Not least with Brexit on the horizon. I had actually forgot about Brexit until one month ago, FFS."

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Comments

Michael Scott 31 July 20 09:46

Not sure the headline reflects the thrust of this article. Overall, in-house lawyers are saying that their external spend will stay the same or increase (56%) rather then drop (44%). 

Anonymous 31 July 20 11:22

@Michael Scott, sure, but I think it's still noteworthy. A large section, of a large type of law firm instructions are believed to be set to reduce - even if it is a bit scaremonger-y in its headline delivery.

Anonymous 31 July 20 16:25

“another said their in-house lawyers would now have to deal with legal tasks "even if is well outside their skill level".”

Sounds like some disputes work in the pipeline. 

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