One of the clearest trends of the recent years has been the growth of in-house legal functions. Internal legal departments have been upsizing and upskilling for a number of years, faced with declining budgets for external legal spend. A common assumption in the industry (although perhaps in private practice only?) was that in-house teams would manage more business-as-usual legal work, while continuing to send more complex and business critical matters externally. Litigators were particularly vulnerable to this assumption, and probably overly confident that claims, start to finish, would continue to be handled largely by external firms.
Recent High Court claims data shows that confidence may have been misplaced.
Data from Solomonic, a litigation analytics company, shows that over the last three years there has been an increase in High Court litigation cases being managed by in-house legal teams. From this data, it is clear that in-house functions are increasingly handling complex disputes themselves, using external counsel less or in more focused ways.
2019 saw in-house legal teams handle 46 claims, 2020 saw this climb to 66 claims and at the start of Q4 2021 we can already see 97 claims being handled by in-house teams, having doubled in less than two years.
While still a relatively small proportion of total High Court litigation (representing 2.5% of High Court claims 2021 YTD) the trend is clearly upwards and appears most common in professional services, financial services and TMT. These sectors tend to have sophisticated and well-resourced legal departments so that is unsurprising but there are examples across all sectors and claim categories.
| |
|
2019 |
2020 |
2021 |
| Professional Services |
Claimant |
16 |
27 |
31 |
| Defendant |
6 |
8 |
7 |
| Financial Services |
Claimant |
2 |
3 |
5 |
| Defendant |
3 |
7 |
9 |
| TMT |
Claimant |
0 |
1 |
0 |
| Defendant |
4 |
2 |
8 |
| TOTAL |
Claimant |
18 |
31 |
36 |
| Defendant |
13 |
17 |
24 |
Total
|
31
|
48
|
60
|
In some cases the trends appear easily explained. It is not surprising that law firms more frequently self-represent in the professional services category and Solomonic has written previously about the ever increasing data protection claims that TMT companies face.
Generally though, it does appear that in-house teams are retaining more work and instructing externally less.
So what does this mean for private practice? More than ever before external counsel will need to demonstrate to its in-house clients that it can really add value. For example, our early case assessment tool, Clear/Cut, was designed precisely to deploy our market expertise and AI tools to assist in-house counsel to reach an early decision on whether a dispute’s merits and financial prospects make it worth pursuing. An early, informed report allows our clients to decide the most appropriate resourcing for a dispute – in-house, external counsel, or a combination.
Similarly, we see increasing demand from in-house clients to work in conjunction with us on large cases, consulting together and dividing labour in a way which takes advantage of the diverse skill-sets across both legal teams. This form of working is particularly effective for large scale disclosure exercises, where in-house and private practice lawyers can work on a review together, making the review process truly integrated and streamlined.
Law firms also provide significant value to clients in other ways: providing insights to in-house teams on trends, changes on the legal horizon, and knowledge about what competitors and other litigants are doing; as well as by delivering technology solutions to drive efficiencies in the cost and conduct of litigation, including the use of technology solutions for disclosure such as predictive coding or the adoption of electronic case management tools
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