When a new litigation matter lands on the desk of corporate counsel, a decision must be made: Should the work remain in-house or should it be sent to outside counsel? And, if work will be sent to outside counsel, are there specific tasks related to the matter that should be handled in-house because it takes advantage of corporate counsel’s knowledge of the business and stakeholders within the company? The 2016 Thomson Reuters Legal Department In-Sourcing and Efficiency Report surveyed more than 400 legal departments to determine how in-house teams make these types of decisions and best divide responsibilities in connection with litigation and disputes.
According to the Efficiency Report, 97 percent of the respondents reported being involved in litigation matters, up 4 percent from last year. Looking at the coming year, most legal departments (69 percent) reported they expect their use of outside counsel for litigation and disputes to stay about the same. However, among the 14 percent of departments planning to increase reliance on outside counsel for litigation and disputes in the coming year, 57 percent said it would be due to an increase in the volume of work and company growth. Many in-house attorneys can relate to the comment “We are a small in-house legal department with limited staff. Due to the volume of work required, we do have times where we need to retain outside counsel for assistance with overflow.”
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On the other end of the spectrum are the 17 percent of in-house teams that anticipate decreasing the amount of litigation and dispute work they outsourced. Of these, 41 percent indicated it was due to cost savings, budget restrictions, and a mandate to reduce legal fees. One attorney explained the impact of budget restrictions: “We utilize outside law firms less and narrowed it down to fewer outside firms. Now requiring alternatives to hourly billing such as flat fee or a combination of capped fees with a results-driven bonus. Trying to get more talented in-house counsel with some certified paralegals with BA degrees that are more general in nature that can handle more areas of the law.”
Budget pressures continue to push legal departments to handle at least some portions of litigated work in-house; usually these activities are associated with early case assessment, including internal information gathering (91 percent), managing the legal hold process (82 percent), and initial information gathering for discovery (81 percent). In-house teams reported they are most dependent on outside counsel for “high stakes” litigation.
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