In-house legal teams 'squeezed,' survey finds

Majority of businesses plan to cut costs even as demand for legal advice continues to rise

In-house legal teams 'squeezed,' survey finds

In-house legal teams are being “squeezed” by a convergence of opposing forces in the business landscape, according to a recent survey from EY.

The Big Four accounting firm’s Reimagining the legal function report 2019 study found that a vast majority of businesses around the world plan on cutting costs in their legal functions. The cuts will have to be achieved by in-house legal teams all while facing increased demand for management information, the survey said.

“These opposing forces are likely to squeeze legal function operations further, a factor that becomes more pronounced when considering the level of cost savings expected by respondents, with larger legal functions seeking to make the most significant cuts,” it said.

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The survey found that 87% of the 1,058 respondents from 25 countries around the world reported that their legal function had undergone either a large or moderate increase in demand for management information in the last five years.

EY said that 82% of respondents said they plan to cut costs in their legal functions in the next two years. Among those, 40% said they plan to cut costs by 1% to 10%, while 37% planned cuts of 11% to 10% and 5% said planned cuts would be more than 20%.

Looking at geographical differences, businesses in North America were the most aggressive in planned legal-function cost cutting with an average of 13%. The region is followed by Middle East, India and Africa, which averaged 11%. Latin America averaged 10%, while Europe and the Asia-Pacific each averaged 9%.

The biggest in-house legal teams planned the deepest cuts, with teams having more than 1,000 professionals planning a 15% in reduction of costs. Teams with 501 to 1,000 planned cuts of 13%, while teams with 51 to 100 expected cuts of 11%. Teams with less than 50 professionals were the most conservative, planning cuts of 9% on average.

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