New research shows that in-house legal department budgets in Spain and Portugal have largely remained the same, but general counsel have reduced their use of external counsel
The majority of in-house legal
departments in Spain and Portugal are outsourcing less work to
external law firms than they did a year ago, according to new
research.
A survey of in-house lawyers in Iberia – conducted by Iberian
Lawyer – revealed that 61 per cent are outsourcing less of
their legal department's work to law firms than they were 12
months previously.
However, though most general counsel are passing less work to
external lawyers, the picture when it comes to in-house legal
department budgets is mixed, the survey showed. Nearly half (48 per
cent) of in-house lawyers who responded to the survey said there
had been no change to their department's budget in the last
year. However, 26 per cent said their department's budget had
got smaller, though the same proportion said their budget is
actually bigger than it was a year ago.
The most common reason cited for in-house legal departments having
smaller budgets was the business in general having less money and
therefore being forced to be more prudent. A total of 66 per cent
of the respondents who said their department's budget was
smaller than a year ago cited the reason as being that their
organisation has "financial constraints and has less money
than it did previously". However, 25 per cent of this group
said the budget was smaller because their in-house department was
bigger and therefore they were less reliant on external help.
With regard to general counsel who report having a bigger budget
for their department than they did one year ago, the most
commonly-cited reason is that they need more help from external
lawyers. A total of 81 per cent of in-house lawyers with bigger
budgets said it was because their organisation had a "greater
need for external legal advice". Meanwhile, 19 per cent of
this group said their budget was bigger because their in-house
legal department was smaller and therefore they needed more
external help. It is worth noting that not a single respondent
agreed with the statement that the reason they had a bigger budget
was because law firms were increasing their fees.
Hourly rate declining
The vast majority of in-house legal departments outsource less than
a third of their legal work. The survey showed that 85 per cent of
in-house lawyers in Spain and Portugal pass less than 30 per cent
of their legal work to law firms. Only 2 per cent of respondents
said they outsource the majority (more than 50 per cent) of their
legal work to external lawyers.
The survey also confirms that, in general, the use of the hourly
rate is in decline. Nearly half (47 per cent) of respondents said
that, compared to one year ago, a smaller proportion of their
budgets were now spent in the form of hourly rates. However, 13 per
cent of respondents said they were spending a larger proportion of
their budgets in the form of hourly rates. Nearly two-thirds (63
per cent) of in-house lawyers said they spent no more than 30 per
cent of their budgets in the form of hourly rates.
A total of 46 in-house lawyers who are members of the Iberian
Lawyer In-House Club at leading companies in Spain and Portugal
participated in the study, which took the form of an online survey
conducted in March 2017.
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