The Winmark Compass Report in association with Cyan Partners
Legal Department Benchmarking
“The legal sector continues to go through dynamic, sometimes dramatic change, which is impacting how legal services are delivered by in-house teams and the law firms who support them. The social, economic and geo-political pressures are more intense than ever and have added to the ongoing demand placed on Legal departments to manage legal risk effectively, while demonstrating an understanding of the business, its commercial imperatives and that they are consistently adding value.
CLOs and General Counsel leading Legal departments are increasingly being asked to take responsibility for ESG and sustainability strategy and implementation within their business. The resources needed to meet these demands are an ongoing issue, particularly in a market in which legal talent is generally in high demand.
The results of the survey point to a corporate function which is established, mature and confident, but which also recognises the necessity for constant improvement and innovation to meet the challenges of the increasingly important role it plays. The recruitment and retention of the talented people needed to drive that innovation forward is more important than ever.”
This report aims to help Legal department heads in this process by providing a benchmark of their own headcount and spend relative to their peers and other key functional departments. It also provides a benchmark of the perceived maturity of departments and the split of staff according to seniority.
Key findings
Headcount
- The average Legal department accounts for 0.2% of all staff within the company – half the ‘all-department’ average of 0.4%.
- Legal departments expect a 2% increase in headcount next year (down from 6% headcount growth last year) – the same as HR, and behind Sustainability (6%) and Finance (8%) departments.
- All departments expect headcount growth in coming year, but (with exception of Finance and Sustainability) at a lower rate than the year before.
- The Legal department has the highest proportion of staff occupying ‘Chiefs, Directors or Head’ roles (24%).
- Mid-tier Legal ‘Manager’ positions split roughly into two thirds who are ‘Technical Experts and Managers’ and one third who are ‘Operations, Information and Project managers’ – overall, 13% of all ‘Managers’ are now ‘Operations, Information and Project managers’.
- The Legal department has relatively low running costs as a proportion of revenue (0.26%). Only the Sustainability department is lower (0.19%).
- The Legal department has the highest cost per head (£131,777) with the IT and Finance departments next with approximately £106,000 cost per head.
- Legal departments expect just a 4% increase in running costs, the second lowest anticipated increase behind HR (2%).
Eexternal Spend
- Legal departments spend 35% of their budgets externally.
- Finance and IT departments spend the highest proportion of their budgets externally (41% and 39% respectively).
- HR departments have significantly lower external spend than other departments – just 10% compared to the ‘all-department’ average of 31%.
Maturity
- More than a third of Legal departments (36%) identify themselves as ‘Mature’. 29% say they are ‘Mature and performing’ and 7% are ‘Mature and in need of transformation’.
- The most commonly reported stage of maturity amongst all departments is ‘Mid transition or mid-change process’ – approximately 30-40% of all departments.
Performance
- A larger proportion of Legal department heads perceive themselves as ‘Performing’ (44%) than in other functions (33%).
- Between a half and two thirds of departments define themselves as ‘In change’. This is by some distance the largest category, underlining the fact that many departments and organisations are in a transitionary stage of development.
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