Corporate Law

Legal departments cut outside spending, focus on managers and specialists, study shows

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The COVID-19 pandemic has pushed more legal departments to cut spending on outside counsel, according to a new report from global research and advisory firm Gartner Inc.

For its 2021 State of the Legal Function report, Gartner surveyed 126 leaders of global legal departments this summer and found that 57% of their spending was staying in-house in 2020, compared to the 50.2% shown in its 2018 report. When these leaders needed to hire outside counsel, litigation comprised about 39% of their external spending.

“We’ve been seeing legal departments slowly bringing more work in-house in an attempt to reduce the biggest driver of their legal spend,” Gartner senior research specialist Caroline Van Allen told for its coverage of the study. “But I think this is a bigger jump than what we’ve seen in past surveys. I would attribute that to the reduced resources legal departments are seeing going into 2021.”

Gartner’s study shows that 51% of respondents expected reductions in their budget for the remainder of 2020, while 93% expected their head count to stay the same or be reduced during that period.

It also shows that in recent years, more legal departments are investing in legal operations managers and specialists who focus on such areas as commercial contract management, intellectual property or regulatory compliance.

In 2020, 41% of study participants reported having a legal operations manager, while in 2018, only 20% reported having this position. Additionally, specialists comprised 36% of in-house legal teams in 2020, but only 30% of teams in 2018.

Van Allen told that in-house leaders look to legal operations managers to ensure their departments “can meet the new mandate of effectively managing all the complex risks that have emerged as a result of COVID-19 while dealing with the flat resources that they expected in 2020 and going into 2021.”

See also:

ABA Journal: “Top law firms fared surprisingly well during COVID-19 pandemic, survey says”

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