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Division of labor:
mergers and acquisitions

When a significant transaction lands on the desk of corporate counsel, a decision must be made: Should the work remain exclusively in-house or should the department partner with outside counsel? And, if work will be sent to outside counsel, are there specific tasks related to the transaction that should be handled in-house because it takes advantage of corporate counsel’s knowledge of the business and stakeholders within the company? The 2016 Thomson Reuters Legal Department In-Sourcing and Efficiency Report surveyed more than 400 legal departments to determine how in-house teams make these types of decisions and best divide responsibilities in connection with mergers and acquisitions.

According to the Efficiency Report, corporate counsel consistently turn to outside counsel for M&A work; 53 percent reported they use outside counsel “usually” or “almost always” for M&A work. This is an increase from last year, when 41 percent reported they “usually” or “almost always” rely on outside counsel in connection with M&A work.

Most legal departments (69 percent) anticipate their use of outside counsel for M&A transactions will remain the same in the coming year. Yet about 22 percent plan to increase the amount of M&A work going to outside counsel, and of these, about 81 percent reported the uptick is due to an increased volume of work and company growth. As one attorney explained, it’s “because we plan to acquire more companies in 2016 than in previous years, and we don’t have bandwidth to do all the work in-house.”

Of the 10 percent planning to turn to outside counsel less often for M&A work, half said it was because they anticipate less of this type of work or because they recently finished a large transaction. For some legal departments, it was simply because attorneys were able to keep work in-house. A respondent reasoned: “I don't see any particularly large or complex M&A transactions coming. In-house counsel is perfectly capable of handling most of our M&A work.”

The top tasks handled in-house for M&A transactions included conducting internal due diligence (74 percent), discussing strategy and goals with the deal team (69 percent), and preparing preliminary documents (65 percent). When do in-house teams tend to turn to outside counsel for M&A transactions? Most often, it’s for significant or complex transactions.

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