Five Challenges for In-House Legal Teams in 2025

The legal landscape continues to evolve rapidly, with in-house legal teams grappling with new challenges that demand strategic foresight, adaptability, and innovation. As we move into 2025, the role of in-house counsel is becoming more multifaceted, encompassing risk management, regulatory compliance, technology adoption, and contributing to business strategy. In speaking with our clients and candidates daily, we can see certain themes emerge.  

There may be some variance across sectors and geographies but these are the top five challenges that in-house legal teams might face in 2025 and some strategy ideas for navigating them effectively.

1. Managing Regulatory Complexity

Regulatory environments worldwide are growing more intricate, complex, and paradoxically fragmented. In 2025, in-house legal teams must contend with a growing patchwork of national and international regulations, particularly in areas such as data protection, environmental sustainability, artificial intelligence (AI), and corporate governance. 

The expansion of AI-specific legislation, such as the EU’s AI Act, - which reminds many of us of the GDPR legislation of 2018 - demands that legal teams stay abreast of highly technical regulatory requirements.

Key Challenges:

• Global Variation: Companies operating across multiple jurisdictions must comply with varying standards and reporting obligations, creating significant administrative burdens.
• Evolving Regulations: Laws and standards change frequently, requiring continuous monitoring and quick adaptation.
• Penalties and Reputational Risks: Non-compliance carries steep financial penalties and reputational damage.  Whilst the former is quantifiable, and could potentially be eye-watering in terms of numbers, the latter is arguably the more challenging for lawyers to manage as it is much harder to quantify for businesses.

Strategies to Address:

1. Invest in Regulatory Technology: Implement tools for tracking and managing regulatory updates. RegTech solutions can automate compliance workflows and provide real-time updates on evolving laws.
2. Build Multidisciplinary Teams: Collaborate with experts in data privacy, environmental science, and AI to ensure comprehensive compliance strategies. The question is are “generalist” lawyers becoming obsolete?  We are seeing in shift in how companies are hiring for specific skill sets, knowledge, and experience.
3. Develop a Compliance Playbook: Create a centralised resource that outlines procedures for handling compliance across jurisdictions, ensuring consistency and efficiency. Again, this is not radical in approach, however, what is changing is how the technology can help ensure (and create the necessary audit trail) a more robust process.

2. Navigating Digital Transformation

Digital transformation is not news. However, the speed and momentum of the change and adoption s reshaping the way businesses operate, and legal departments are no exception. In-house legal teams are expected to adopt and integrate new technologies, such as AI-powered contract management, predictive analytics, and blockchain for secure transactions. However, this technological shift comes with its own set of challenges.

Key Challenges:

• Technology Adoption: Many legal teams struggle to identify and implement the right tools that align with their specific needs.
• Data Security Concerns: As legal processes become digitised, protecting sensitive legal data from breaches is a top priority.
• Skills Gap: Legal professionals may lack the technical expertise required to fully leverage new technologies.

Strategies to Address:

1. Adopt LegalTech Solutions: Embrace tools for document review, e-discovery, and contract lifecycle management to improve efficiency and accuracy.
2. Prioritise Cybersecurity: Work closely with IT teams to ensure robust data protection measures, including encryption and multi-factor authentication.
3. Upskill Legal Teams: Provide training programs to bridge the gap between legal expertise and technological proficiency.  It is interesting to note that we are seeing in-house legal teams hire non-legal specialists into their departments.  For example, “prompt engineers” to help upskill lawyers in the usage and engagement with various technologies.
4. Partner with Tech Vendors: Collaborate with LegalTech providers to customise solutions that meet your organisation’s needs.

3. Balancing Cost Pressures and Resource Constraints

More with less.  Or less with less.  In 2025, in-house legal teams continue to be under increasing pressure to deliver more value with fewer resources. Legal departments are often seen as cost centres, and organisations demand efficiency and cost-effectiveness while expecting top-tier legal advice and risk management.

Key Challenges:

• Budget Cuts: Economic uncertainties and tightening budgets mean fewer resources for legal teams.
• High Workloads: Growing regulatory demands and litigation risks increase the volume of work. As well as the “custom” in some businesses that legal need to be involved in for example sales contracts.
• Outside Counsel Management: Ensuring law firms deliver value for money remains a significant challenge.

Strategies to Address:

1. Implement Alternative Fee Arrangements (AFAs): Negotiate fixed fees or success-based pricing with outside counsel to control costs.
2. Work Stream Enablement: Automate routine tasks such as contract review and compliance monitoring to others across the business to free up resources for strategic work. For example, templates for sales contracts and enabling the sales teams to self-serve.
3. Outsource Non-Core Tasks: Consider outsourcing low-risk legal functions to third-party providers to manage workloads effectively.  Legal services outsourcing has become a normal resource for many large multinationals.
4. Track Metrics: Use key performance indicators (KPIs) to demonstrate the value of in-house legal services to organisational stakeholders.  Slightly more controversial for some General Counsels, however, legal departments should not be excluded from better practice.

4. Driving ESG (Environmental, Social, and Governance) Compliance

Environmental, social, and governance (ESG) factors are now at the forefront of corporate priorities, driven by stakeholder demands, investor scrutiny, and regulatory requirements. In-house legal teams are expected to guide organisations through complex ESG obligations while ensuring alignment with corporate values and long-term sustainability goals.

Key Challenges:

• Regulatory Scrutiny: New laws, such as the EU’s Corporate Sustainability Reporting Directive (CSRD), require detailed disclosures and robust ESG policies.
• Litigation Risks: Companies face increased litigation related to greenwashing, labour practices, and environmental impact.
• Cross-functional coordination: Legal teams must collaborate with multiple departments, including HR, finance, and sustainability, to address ESG issues holistically.

Strategies to Address:

1. Integrate ESG into Governance: Ensure ESG considerations are embedded in decision-making processes and corporate policies.
2. Develop Transparent Reporting: Work with sustainability teams to prepare clear and accurate ESG reports that comply with global standards.
3. Proactively Mitigate Risks: Conduct audits to identify potential ESG risks, such as supply chain vulnerabilities or misleading marketing claims.
4. Foster Cross-Functional Collaboration: Establish regular communication channels with other departments to ensure a unified approach to ESG initiatives.

5. Managing Talent and Workforce Expectations

As a specialist legal, compliance, and tax executive search business, our team at Laurence Simons speaks to lawyers across the globe every day.  We also speak with Talent Acquisition professionals in our clients’ organisations and many Chief HR officers. The workforce dynamics in 2025 are characterised by shifting expectations around flexibility, inclusion, and professional development. Legal teams face challenges in attracting, retaining, and motivating top talent in an increasingly competitive market.

Key Challenges:

• Demand for Flexibility: Hybrid work models have become the norm, and legal professionals expect greater autonomy in where and how they work.  This is typically the first question we are asked when headhunting our candidates.  Before the global pandemic, it was top five.
• Diversity and Inclusion: Companies are under pressure to demonstrate tangible progress in building diverse and inclusive teams.  This needs to be more than lip service.  The social contract between employers and employees is real for younger workers, including junior lawyers.
• Burnout and Retention: High workloads and long hours contribute to burnout, making retention a pressing issue. The statistics for lawyers regarding mental illness, stress, anxiety and suicide are shocking – and across all levels of our sector and industry.

Strategies to Address:

1. Promote Work-Life Flow: Implement policies that encourage flexible working hours and also have conversations early on around what core hours are expected.  Much is written about culture but what we know for sure is those businesses that have the well-being of their employees at the core of their culture, keep their employees.  Simple.
2. Invest in Professional Development: Offer training programmes, mentorship opportunities, and clear career progression pathways.  Sponsorship is also a vital pathway for talent to thrive and grow.
3. Enhance Diversity Efforts: Set measurable diversity goals and create a culture of inclusion through targeted initiatives.  Similarly to the point above, sponsorship is also key to ensure DE&I initiatives result in progress.
4. Leverage Technology for Collaboration: Use collaboration tools to enable seamless communication and productivity in hybrid work environments.

In Conclusion

The challenges facing in-house legal teams in 2025 are complex, interconnected, and evolving. By addressing regulatory complexity, embracing digital transformation, managing cost pressures, prioritising ESG compliance, and fostering a dynamic and inclusive workforce, legal departments can position themselves as strategic partners within their organizations.

Ultimately, navigating these challenges requires a proactive approach, leveraging technology, and building a culture of innovation and resilience. For in-house legal teams, the opportunity lies in turning these challenges into catalysts for growth and value creation.