Majority of GCs reporting double-digit budget cuts and intensifying resource crunch as they wrestle with a fast-evolving legal and technology landscape
NEW YORK, Apr. 2, 2024—The vice is tightening on in-house legal departments as they grapple with a perfect storm of challenges that have plagued GCs for years, turning up the heat on under-resourced, overworked teams that were already fighting the scourge of burnout.
Budgets are being squeezed to the breaking point—96% of GCs had their budgets cut coming into 2024, and 54% experienced cuts of more than 10%—as standard law firm rates rise an expected 6% to 8%, taking an ever-larger slice of GCs’ shrinking budget pie.[1]
Recruiting and retaining top quality and specialized talent is more difficult than ever, with 80% of GCs girding for a headcount freeze in the next 12 months. And a deluge of complex new financial, cybersecurity, privacy, AI, and other laws and regulations demand attention to ensure compliance and mitigate risk for the business.
The kicker: While 97% of GCs engaged outside counsel due to their lack of resources, that approach proved problematic. An astounding 100% of GCs reported cost, quality, and other challenges that made them regret those law firm engagements in some way. It appears the industry has crossed the tipping point, as 89% of GCs surveyed no longer view law firms as a completely effective solution to their resourcing challenges.
These insights, along with additional research results and observations, are included in View from the Top: GCs’ 2024 Outlook on Budgets, Talent, and Innovation, a new national research study of 300 GCs at companies ranging from small and mid-sized businesses to large enterprises, conducted by Wakefield Research and commissioned by Axiom. The study highlights the urgent need for legal departments to embrace innovative solutions to drive efficiency, mitigate risk, and uphold their company’s values.
“GCs and CFOs are increasingly challenged by declining budgets, rising operational costs, and new technology and compliance challenges,” said Ashlin Quirk, SVP and General Counsel at Axiom. “Wakefield’s study underscores the need for GCs, CFOs, and legal ops to rethink resourcing and embrace a more modern, flexible approach that lets them variabilize more of their spend, and respond dynamically to the ebb and flow of work—including projects they would normally send to their law firms. Axiom’s broad array of in-house solutions and law firm services are designed to help legal teams respond to these changing demands, helping them optimize budgets, get quality and specialized legal talent when and where they need it, and confidently meet the businesses’ needs to drive long-term value.”
Other insights disclosed in View from the Top: GCs’ 2024 Outlook on Budgets, Talent, and Innovation include:
The good news: GCs seem to recognize the old models are broken, and hunger for innovation. Fully 85% of GCs who engaged a law firm for support said they’d outsource legal matters to a modern legal talent provider if they could save money and maintain high quality, oversight, and accountability. This shift in mindset represents a significant opportunity for legal departments to embrace innovative solutions that can help them navigate the challenges of an increasingly complex, evolving industry.
Axiom commissioned Wakefield Research to engage 300 General Counsels at U.S. companies ranging from small and mid-sized businesses to large enterprises. Half of respondents were GCs at SMBs, and half were GCs at large enterprises. The 35-question online study was conducted in January and February.
The full report, View from the Top: GCs’ 2024 Outlook on Budgets, Talent, and Innovation, is available to download at no charge at https://www.axiomlaw.com/resources/articles/2024-gc-survey-report.
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Axiom is where high-caliber legal talent meets full-service law firm work. We invented the alternative legal services industry 24 years ago and now serve more than 1,500 legal departments globally, including 68% of the Fortune 100, with 95% client satisfaction. Axiom gives small, mid-market, and enterprise clients a single trusted provider who can deliver a full spectrum of legal solutions and services across more than a dozen practice areas and all major industries at rates up to 50% less than national law firms. To learn how Axiom can help your legal departments do more for less, visit axiomlaw.com.
[1] https://www.law.com/americanlawyer/2023/10/30/big-laws-approach-to-billing-rate-hikes-in-2024