Scaling up and growing in-house legal teams

When to, and how to scale up in-house legal teams can be a contentious issue for General Counsels.? This is especially relevant in times with prevailing economic, technological, and environmental conditions affecting businesses, and the increasing pressure some legal departments are under to take on additional projects /portfolios without a corresponding increase in headcount.

Annually, the Association of Corporate Counsel (ACC) publish a benchmarking report, designed for in-house professionals, providing insights into legal department operations. The Report is based on responses from over 400 legal departments across multiple industries and jurisdictions.? The US based legal teams are the largest contributor to the data.?

Headcount and structure forms one aspect of the Report and legal staff composition and ratios are presented as the median number of legal personnel measured against corporate revenue. The 2024 data reported that “The number of legal staff scales significantly with company revenue. Companies with less than $1 billion in revenue have a median of only four legal staff members”?

Certainly, in my experience from talking to General Counsels on this subject, guides are a helpful starting point for evaluating headcount, but scaling effectively is less formulaic and more about proportionality to workloads. And the number of lawyers in an in-house legal team is not solely dependent upon revenue, although it is an important driver.

Revenue and profit are, of course, highly relevant, but the overriding factors appear to come down to the complexity of a business, risk elements, jurisdictional reach and a company’s footprint.

?For example, if a business has a combination of the following:

?·??????? numerous assets

·???????? multiple manufacturing or distribution sites

·???????? complicated leasing arrangements

·???????? downstream components,

?then the requirement for more lawyers increases.

On the other hand, a stable business with a stable balance sheet with much less complexity in its structure may not require as much legal resource, even if revenue levels are high.

To keep as much work in-house as possible, teams need to be of a reasonable size, and that will again depend on the complexity factors above.

The need for skills and resources might also be assessed in the shorter term, by other rising factors, such as an active corporate acquisitions agenda, specific projects or large-scale litigation impacting the business.

Essentially, is it more cost effective to hire a specialist lawyer to undertake a particular type of work, rather than outsource? And would the saving be far greater over a 12-month period?

Ultimately, no two businesses are the same and resourcing is a case of weighing up the cost of outsourced legal fees, against recruiting a full-time permanent resource, or a lawyer on a fixed term contract to cover short term needs.

Sacks Legal Recruitment is a specialist legal, governance, risk and compliance recruitment consultancy. https://sackslegalrecruitment.com.au?

For help with your permanent or temporary legal resourcing needs, contact Tara Sacks on 0414 105 140 or email?[email protected]

For career advice and market information in these sectors contact Tara Sacks.