Resourcing Legal Work in Uncertain Times

For in-house legal departments, resourcing is an ongoing issue. And it has become a significant one: according to the 2025 ACC Chief Legal Officers Survey, being understaffed is the biggest barrier legal departments face. In parallel, 43% of CLOs plan to send more work to their law firms. 

As of late 2024, nearly one in three CLOs planned to increase the number of in-house counsel they hire this year. That number was closer to half among larger organizations. However, economic, geopolitical and policy changes over the past several months have complicated this picture, leading many organizations to reevaluate the budgets and plans they set in the third quarter of 2024. This reevaluation may result in hiring freezes and reductions that will impede planned headcount growth. Some legal department leaders may even find themselves eliminating existing positions, not adding them. 

So, how can legal departments manage more work with fewer in-house resources? There are two actionable steps in this environment, which can work in tandem. The first is to improve how in-house counsel work with law firms through a relationship-centered approach. The second is to focus on enhancing the efficiency of the department as much as possible through automation, artificial intelligence, work with outside service providers, self-service solutions and other approaches. 

Improving the law firm dynamic

The near-universal need to send more work to law firms is occurring at the same time that law firms are increasing rates. The 17th Annual Law Department Operations Survey by Blickstein Group, in collaboration with FTI Technology, found that 91% of respondents saw their rates go up in 2024, with 42% of those seeing increases of more than 5%. Certainly, many organizations respond to these pressures by asking for rate concessions. This can be effective, up to a certain point. However, shifting focus to a strategic, mutually beneficial relationship can reap greater rewards. The key is to be more thoughtful and prescriptive.

For example, it’s critical to have frank conversations about the organization’s strategic plans and the resulting work law firms can expect to receive, to have those discussions as early as possible and to ensure they are approached as a partnership. While it’s difficult to predict how much guaranteed work a legal department will send to a firm, it’s important to be realistic. When firms are confident they will receive a certain volume of work, they will often be more open to alternative fee arrangements, discounts, new resourcing models and different ways to engage. 

This approach creates additional benefits. Outside counsel will develop a deeper understanding of the organization’s strategic objectives, goals and risk tolerances, leading to less knowledge transfer on individual matters, and ultimately saving time and money over the big picture.

However, to be effective, this approach requires more than “managing by outside counsel guidelines.” It also requires frequent communication, regular updates during the life of the matter and enforcing accountability throughout, not just as invoices are received.

Internal accountability about work that is being done by outside counsel is also important to support ongoing assessment of whether the work actually needs to be done by law firm attorneys. Particularly in times of overload and understaffing, it’s easy to automatically send work to outside counsel, even when other options exist.

Work that stays in house

Work that doesn’t need to be handled by in-house counsel or law firms can and should be managed in other, more efficient ways. Legal service providers can offer several advantages, including specialized expertise in process and technology and a greater flexibility to billing approaches. Alternative legal service providers are often not beholden to the billable hour and are incentivized to be as efficient as possible. 

Technology, including generative AI, can provide support as well. While a great deal of the promise of generative AI is still unfolding, particularly in-house, the potential is intriguing. In order to get from ideation to execution, the key is to focus on specific challenges and tasks. A clear understanding of the needs and the targeted capabilities available to address these needs will help cut through the noise and vaporware that currently surrounds so many generative AI products on the market today.

Building a self-service tool, which helps businesspeople help themselves, is another approach to mitigating the ballooning volume of work requiring in-house counsel input. These types of solutions, enabled with legal-approved frameworks, allow individuals across the business who are working on straightforward matters to have many of their legal requests answered automatically, with responses pre-built by the legal department. For example, a self-service platform, managed by legal, that allows certain commercial teams to generate and execute standard template contracts without waiting in a long queue with the legal department. Not only do these tools save time for many business functions and the legal team, they also drive improved consistency for specific tasks. Law firms or service providers can help develop these tools, leveraging generative AI or other powerful technology.

Conclusion

In uncertain times, the best-laid plans may not work out. Many legal departments that hoped to hire more in-house attorneys are pivoting to other approaches, including sending more work to law firms. Yet budgets are not increasing, so legal departments must respond – and not just by taking a hard line with their law firms. 

If unexpected situations develop, legal departments may need to rely on their outside counsel for immediate assistance and be nimble internally. Thus, legal leaders must be strategic with law firms, while also considering other approaches for accomplishing legal work. When legal departments have a plan, paired with good relationships with outside counsel and vendors, everyone wins.

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.