• 79% of corporate law departments report increased workloads, with stagnant or shrinking resources, according to a Thomson Reuters report.

• Many are reallocating work to mid-size firms, leveraging technology to streamline operations.

• Despite growing demand for tech adoption, only 36% of legal departments saw tech budget increases last year.

Corporate law departments are facing mounting legal needs without additional resources, as shown in the Thomson Reuters Institute’s 2024 Legal Department Operations Index. 

Nearly 79% of legal departments experienced an increase in workloads over the past year, but most have not expanded staffing to meet the demand, creating challenges for general counsel looking to manage expanding caseloads efficiently.

• The challenge of increased workload comes at a time when outside counsel billing rates have continued to climb—up 6.5% on average through mid-2024.

• Two-thirds of respondents noted that their departments are dealing with flat or shrinking attorney headcounts. 

• Controlling costs is even more central than ever before, with 84% of respondents calling it a top priority.

The Thomson Reuters report surveyed 80 legal department operations professionals in the United States. Of the companies surveyed, 37% reported annual revenues of $5 billion or more. 

Cost-Efficient Solutions

The need to balance rising work with limited budgets is driving many legal departments to explore more cost-efficient solutions, according to an analysis of the Thomson Reuters report by Law.com.

Jason Winmill, managing partner of the in-house legal consultancy Argopoint, described the strain legal departments as being caught in a vise that is “increasingly tightening.” He further underlined that traditional cost management tactics are no longer effective.

Jared Sine, chief legal officer at GoDaddy, echoed these concerns. "At the end of the day, law firm costs keep going up,” he said, stressing the importance of handling key matters internally while using automation to address more routine tasks.

Tiered Legal Work

To control costs, some departments are tiering legal work, sending lower-stakes matters to mid-sized law firms with more affordable rates rather than Am Law 100 firms. 

• While complex, high-stakes work remains with top firms, this shift in strategy enables in-house legal teams to focus their resources on critical issues, reserving a budget for higher-value services while still addressing more routine matters.

• Legal departments also often use outside counsel as an escape value to get through crunch times rather than tapping them only for matters that are beyond the expertise of the department, said Susan Hackett, CEO of the consulting firm Legal Executive Leadership.

This tiered approach also reflects a broader trend of outsourcing that has become a staple for legal departments under budgetary pressure. Cost management remains paramount for many in-house leaders, who are now compelled to seek efficiencies beyond traditional practices.

Technology as a Cost-Saving Tool

Technology continues to be a key focus, as departments look to streamline processes and reduce manual tasks. 

• The Thomson Reuters report highlights that 75% of legal departments are prioritizing legal technology investments to improve workflows. 

• Despite this prioritization, most departments report underutilization of their current tech stack, and only 36% have seen an increase in their technology budgets.

• Even so, 60% of departments implemented new tech solutions over the past year.

For many legal leaders, tech adoption is necessary to keep pace with growing demands without overwhelming available resources. This is hy making wise tech investments is of critical importance, Sine said. 

"If you're using the right set of tools from an automation perspective, plus making the right cost-benefit analyses and trade-offs, I think you can limit the use of outside counsel far better than just relying on them," he said. "When you're too reliant on them, you don't always know what they're doing or whether you're getting real value for your money."