Average legal department grows headcount by a third in past year,
The latest EMEA Legal Department Benchmarking Survey 2014 reveals over a quarter (26%) of in-house teams have already made hires this year, and 65% expect to add to their team over the next two years.*
In a sign of growing confidence no departments anticipate headcount will fall and over a third (35%) expect team size to remain the same.
This is a marked improvement on the previous two years, with nearly half (49%) having expected their headcount to remain static in 2013 and 45% in 2012.
Rising internal legal budgets driving expansion
The expansion of in-house legal teams is being driven by rising internal budgets, with 45% of departments expecting internal spend to grow over the next year, compared to just 33% who thought the same about external budgets.
In 2013, nearly a quarter (24%) of departments anticipated internal legal expenditure would decrease there has been a marked improvement this year with the figure falling to just 6%. Businesses appear to be prioritising internal spend, with more than three times as many departments (22%) expecting a fall in external spending during 2014.
Expanding in-house legal work
The past two years have seen a significant expansion in the areas of legal work carried out in-house, with substantial increases across the board. Specific areas of specialism such as taxation have seen the number of internal departments carrying out such work double – 16% are responsible for tax activity in 2014, rising from 8% in 2012.
Over the last twelve months, however, there has been a clear focus on corporate and commercial activity – now practiced by 87% of in-house teams, compared with 86% in 2013 – and bribery, corruption and compliance – up from 64% in 2013 to 69% in 2014.
The number of in-house legal teams carrying out work in banking and capital markets has remained stable from last year, at just under a quarter (24%). Across all other areas, the number of internal teams carrying out work has fallen, with just 43% doing regulatory work compared with 51% last year and 22% doing insurance and reinsurance, down from 30%.
In-house focus on intellectual property has also fallen marginally, but this remains the third area of legal work most commonly practiced by internal teams.
Naveen Tuli, global managing director of Laurence Simons, said, “As the broader economic recovery begins to really take-off confidence is being reinvigorated within companies – but these findings suggest the recession still lies in the back of employers’ minds when it comes to outsourcing legal work, which is reflected in a continued shift towards expanding and investing in in-house legal teams.
“Many firms are choosing to take a long term perspective by hiring more internal staff and increasing legal expenditure, rather than send out work to private practices. From a budgetary standpoint, fixed workforces allow for greater stability when it comes to planning and forecasting compared to the ad-hoc casework often carried out by law firms.
“In terms of legal counsel, in-house teams can provide expertise that is complemented by detailed working knowledge of the company. Having a skilled team of lawyers on-hand internally means that corporations will be able to increase value for money, at a time when many are seeking to safeguard their long-term health after emerging from the depths of recession.”
As the size of legal teams in the EMEA region has increased by a third in the past year to an average of 16 lawyers, global teams have also expanded. The average legal department worldwide has grown by 57% in the past two year, increasing from 35 lawyers in 2012 to 55 in 2014.