Resistance to transform in-house legal departments could expose businesses to wider transformation risks, according to PwC research

• 31% of General Counsels (GC) and heads of legal cite resistance to change as the biggest barrier to in-house legal transformation
• Over one third (34%) of senior executives cite lack of budget as their biggest obstacle to transformation goals
• 48% of General Counsels and heads of legal want to increase their legal functions contributions to business-wide growth and transformation
• 42% see cost cutting and driving efficiencies within the legal function their top priority for transformation in the next 12 months 

Around one third of UK senior executives see lack of budget or cultural resistance to change as their biggest obstacle to legal transformation over the next 12 months. The research from PwC and FT Longitude is based on an extensive survey of 300 UK business executives, company secretaries and legal leaders looking at transformation within their in-house legal department. The report ‘Transform Legal to Transform Business’ highlights that the transformation of in-house legal services is critical to the success of any wider business transformation. 

Just under half (48%) of GCs and heads of legal want their in-house legal department to contribute to business-wide growth and transformation in the next 12 months. However, they see: lack of budget (34%), resistance to change (31%) and lack of resources (28%), as the top three barriers to transformation within their legal function. This sentiment is echoed by the wider business, with 53% of the c-suite and 38% of company secretaries wanting their legal department to increase their contribution to business-wide growth and transformation, yet cite cultural resistance to change (36%) and lack of knowledge of the wider businesses transformation agenda (29%), as the greatest barriers to their legal department’s transformation. 

Data from PwC and FT Longitude highlights that despite the much-publicised benefits of transformation, only 27% of companies surveyed have made significant progress in transforming their in-house legal function with the majority (58%) stating they have only made some progress. Many have implemented cost-cutting tactical initiatives such as relocating operations, but few have fundamentally changed their legal operating models which could significantly hold them back from transformation. Fewer than one quarter of legal functions say they have outsourced any activity. The survey highlights that the 41% of legal functions that outsource elements of procurement and contract work have made significant transformation progress compared with 22% that do not.

Encouragingly, the legal function’s ability to support wider business growth and transformation initiatives increases as it transforms. More than half (54%) of those surveyed that have transformed have seen an improved capacity to work on growth and transformation projects, whilst 49% cited improved customer satisfaction and 39% of transformed in-house legal teams have seen an improved ability to attract and retain talent, increasing to 48% for those who have ‘significantly’ transformed.

Teresa Owusu-Adjei, UK head of legal business solutions at PwC, says:

“While businesses have invested huge amounts of money in transformation over the last five years, legal is often an afterthought. But with 22% of UK CEOs telling us their business may not be economically viable within the next 10 years if they continue on their current path, it puts huge pressure on organisations to transform; and its imperative business leaders understand the opportunities legal transformation can unlock, for a successful wider business transformation strategy.

“Legal is transforming, but to accelerate the pace in-house legal functions must prioritise transforming itself from a ‘guardian of risk’ to ‘an enabler of transformation’ before it can assist the business. Legal leaders need to think about outsourcing, rethinking purpose and process efficiencies, technology and the right talent, which will drive successful transformation and forge closer ties between legal and the wider business. In tandem, the c-suite must invest in its legal function to ensure it evolves and meets the demands of modern business.”