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Against this backdrop, the Law Life Sciences sector team at Ernst & Young LLP recently surveyed several leading multinational companies in the pharmaceutical, consumer health and medical device industries to better understand the organizational structure and strategy of their corporate legal departments. Our survey also aimed to shed light on how operations like these can function more efficiently. The insights gathered from this survey and our experience serving life sciences corporations highlight four key actions that can drive efficiencies and optimize costs for in-house life sciences legal departments.
1. Optimize your organizational structure.
While there is no universally ideal structure for a life sciences company legal department, there are several key strategies to create a more efficient and effective organizational structure, including aligning with the business needs, stabilizing the talent, utilizing a hybrid approach to resource allocation and reducing administrative burdens.
First, it must be aligned with the company’s operational needs. The data from the survey shows that within most life sciences companies, the chief legal officer, general counsel or other legal department leader reports directly to the CEO. This relationship is critical in driving consistency between the organization’s operational priorities and its legal strategies, resulting in effective communication and implementation. For those companies that don’t have a direct reporting line from the legal function all the way to the top, establishing clear protocols within the business and regular check-ins will help to facilitate more robust communication and collaboration.
In addition, 73% of life sciences companies in the survey are currently maintaining their legal department headcount. With industry leaders keenly focused on reducing internal costs, maximizing the efficiency of the current workforce is a cost-effective approach to managing talent that prioritizes optimizing the existing talent pool rather than dealing with the disruptions of frequent staffing changes. As such, instead of hiring new talent, which can be costly and time-consuming, proactive life sciences companies are investing in upskilling current employees to optimize resources and show employees they are valued, both of which can drive retention.
Resource allocation within legal departments is another key focus area. Increasingly, companies are adopting a hybrid model that balances geographical and practice area considerations. This approach is particularly relevant in the life sciences industry, where regulatory and specialized field demands vary significantly across regions. By prioritizing both geography and practice areas, legal departments can tailor their structure to meet the unique challenges they face. The nearly even split in the practice of attorneys reporting outside the traditional law department structure (45% reporting such arrangements) suggests a move toward more integrated legal operations within business units, which can foster a more cohesive legal strategy across the company.