law

Secondments, labour arbitrage and a new race to the bottom

Follow me:

  • In-house teams have been the biggest ‘growth’ area in legal post 2008 and some in-house teams are now bigger than the law firms they previously outsourced worked to
  • Most GCs report to the CFO
  • GCs are increasingly under pressure from the CFO to reduce their ‘cost’ (including bonuses now linked to reducing cost – note: not external legal spend)
  • GCs have effectively two cost centres: ‘labour’ or ‘ external legal spend’
  • Procurement tells GCs they can reduce both ‘labour’ and ‘spend’ at the same time – secondments (heavily discounted at daily or weekly rates in RFPs – don’t need to advise out and don’t need to hire in-house!)
  • Law firms enter the discounted labour arbitrage market

And a new race to the bottom starts*…

As always, interested in your thoughts/views/feedback.

rws_01

*welcome to the party LoD