According to a recent survey of General Counsel by Nishlis, the evolving legal landscape has impacted the role of in-house counsel in many ways. Regulatory change, compliance, data protection and global and/or geopolitical uncertainty were among issues worrying GCs. Factors like increasing business complexity, growing regulatory scrutiny, and the changing needs from external legal counsel have indeed led to an expansion of in-house legal departments, and is also altering what they need from external counsel and how they need it.
As showcased in the Nishlis annual GC survey, GCs are focusing their work with fewer law firms than in the past, with today 41% hiring 3-5 law firms. More work is done in-house due to tighter budgets and a concentration of work.
The volume of legal work sent to law firms has held up well, however, more work (25%) has remained in-house. GCs have recently preferred to handle regulatory and real estate work in-house, where possible, but are somewhat more likely to require external counsel on employment and IP issues, especially with the rising importance of data protection and privacy. Litigation is out in front as the type of legal work most likely to be outsourced to private practice firms, but M&A also remains very high on the list of work outsourced, as well as tax and intellectual property law, as companies look to protect their bottom lines and IP assets.
Much of this is backed by The General Counsel Report 2023, which examines the risks keeping general counsel up at night – which include compliance, regulation and technology “modernization,” while concerns relating to employment issues and data privacy and security remained somewhat steady.
60% of respondents in this survey witnessed an increase in new regulations that require policy refreshes and additional headcount; 47% experienced more contract management demands; 33% noted a rise in M&A activity; 30% reported increases in privacy violations and notifications; and 27% mentioned increases in class action litigation.
ESG matters were more common this year than in any of the prior years of The General Counsel Report. In fact, 60% of the participating general counsel noted that their organizations are concerned about ESG as a business imperative. It’s an imperative for so many because companies are being measured in this area, and the quality of their efforts are increasingly linked to their business success. Investors will screen a company for ESG risk, and if you don’t score well enough, there is a potential risk they will not fund the company. When choosing a law firm, personal connection is the highest source of influence, according to about 70% of respondents in Nishlis’ survey. This could be through a previous relationship, legal engagement with a given firm or lawyer, or a personal recommendation. In recent years, GCs continue to push for a better service to justify fees, especially in this economic climate. When selecting a law firm to work with, client service unsurprisingly comes in at number 2, behind a high standard of professionalism. This mirrors the way many corporate clients behave in their own operations and with their clients. Given the current global downturn, legal fees, which were at #4 in the last survey, climb to 3rd place.
More GCs are active today on LinkedIn, with two-thirds of GCs proactive on the social media platform, as opposed to under half two years ago. With that in mind, it is important to make time to reach out and strengthen those connections.
As the Nishlis survey underlines, GCs point out the importance of client updates and content in general. However, many law firms have been reluctant to oblige this, thinking it is a burden. In a market saturated with content, value-add, readability, and relevance will be key. A survey of General Counsel in the UK and US by Passle supported this, revealed that 77% of GCs spent 5 hours or more staying up to date each week – although not in a structured time slot, with weekends most popular, followed by time after work, during lunch and in between meetings. More interestingly just 8% of GCs thought law firms enough timely, relevant content to the market.
In the Passle report, 61% of GCs would prioritize suppliers that kept them up to date with the latest industry developments and best practices and 100% of GCs felt that law firms had a responsibility to keep their clients and prospects informed about news and developments that include legal updates, industry trends, industry appointments, and content that could generate ideas and opportunities. Newsletters, webinars and podcasts are over 1/3 of the ways GCs receive updates, with many visiting a law firm’s website weekly or monthly to consume the relevant updates there.