What Declining UK Interest Rates Mean for In-House Legal Teams in 2026

Declining UK interest rates are beginning to change the pace and nature of business activity across sectors. After a prolonged period of higher borrowing costs, the Bank of England’s decision to cut the Bank Rate down to 3.75% in late 2025, and forecasts pointing to further easing through 2026, have improved confidence around investment, refinancing, and growth initiatives.  

For in-house legal teams, this downward trends presents great opportunities, but also a need to prepare. As capital becomes more accessible, organisations are revisiting transactions, commercial expansion, and strategic projects that were previously paused. This means that legal teams will need to support this renewed momentum, enabling faster decision-making while maintaining governance, compliance, and risk control. 

As the UK moves into a more active operating environment in 2026, in-house legal teams that anticipate how demand will change – and adapt their resourcing and operating models accordingly – will be better positioned to support growth and strengthen their role as trusted business partners. This article outlines how legal leaders can adjust hiring and operating models to meet these changing expectations. 

Why declining interest rate changes matter to in-house legal teams 

Interest rates influence how organisations invest, acquire, restructure, and manage risk. As rates decline, businesses typically revisit initiatives that were paused during tighter financial conditions. 

For in-house legal teams, this often results in: 

• Increased transactional and commercial activity 
• Greater appetite for acquisitions, refinancing, and strategic partnerships 
• Faster decision-making cycles with higher legal involvement 
• Renewed focus on growth-related risk rather than cost containment alone 

Legal teams that were sized or structured for a more cautious environment can quickly find themselves under-resourced as activity increases. 

How declining interest rates increase deal flow and commercial complexity 

Lower interest rates tend to stimulate mergers and acquisitions, refinancing, and commercial expansion. In-house legal teams are often expected to support higher volumes of transactions while maintaining quality and speed. 

This places pressure on: 

• Corporate and commercial legal capability 
• Contract review and negotiation capacity 
• Governance around approvals and execution 

Legal leaders should reassess whether existing team structures can handle increased throughput without compromising risk management or burning out key personnel. 

How declining interest rates change risk profiles and regulatory scrutiny 

While lower interest rates encourage growth, they do not reduce regulatory expectations. In many cases, increased activity attracts greater scrutiny, particularly around governance, financial controls, and disclosure. 

For in-house legal teams, managing how decisions are made as pace increases can be challenging. Shorter timelines, parallel workstreams, and earlier commercial commitments can narrow the margin for error, especially around approvals, escalation, and documentation. 

In this environment, legal teams are often required to engage earlier and more strategically, helping leadership pressure-test assumptions, maintain consistent risk thresholds, and ensure that governance frameworks continue to function under strain. In this context, legal plays a stabilising role, enabling the business to move faster without creating exposure that only becomes visible later. 

Why in-house legal teams face higher expectations around speed and responsiveness 

Alongside heightened scrutiny and governance pressure, businesses expect legal teams to keep pace as opportunities emerge. When capital is cheaper and activity increases, this can expose gaps in resourcing, team structure, delegation, and process maturity. 

Common pressure points include: 

• Over-reliance on a small number of senior lawyers 
• Delays in contract review or approvals 
• Limited middle-layer capability to absorb increased workload 

Without adjustments to team structure or operating model, legal teams risk becoming a constraint on execution. This is why many legal leaders look to mid-level hiring or process improvements to support speed without compromising quality.

What declining interest rates mean for in-house legal hiring strategy 

Declining interest rates often coincide with a renewed focus on building internal capability rather than relying solely on external counsel, which impacts how legal leaders plan future resourcing. 

In-house teams should prioritise: 

• Commercial lawyers with strong transactional experience 
• Mid-level counsel who can operate independently 
• Legal professionals comfortable supporting growth initiatives 
• Individuals with experience navigating change and increased volume 

Waiting until workload peaks to hire often leads to reactive decisions and missed opportunities. 

Common mistakes legal teams make during economic upturns 

As conditions improve, it’s easy for legal teams to underestimate the pace at which demand returns. Common mistakes include: 

• Assuming existing teams can absorb increased work indefinitely 
• Delaying hiring decisions until pressure becomes acute 
• Overloading senior lawyers rather than building depth 
• Treating growth as temporary rather than structural 

Addressing these issues early allows legal functions to support growth more effectively and sustainably. 

How UK in-house legal leaders can plan proactively in 2026 

As business activity increases, in-house legal leaders would benefit from using this period to plan deliberately rather than respond to pressure as it emerges. In our work with in-house legal teams, effective talent planning in 2026 typically focuses on: 

Looking ahead to future workload, not just current demand 
Assess upcoming transactions, investment activity, and commercial initiatives to understand where legal demand is likely to increase, and which teams or individuals will feel that pressure first. 

Identifying roles that add leverage and resilience across the team 
Prioritise hires that reduce dependency on a small number of senior lawyers, such as mid-level counsel who can manage matters independently and keep work moving as volumes rise. 

Aligning legal resourcing closely with commercial priorities 
Stay connected to business plans and growth timelines so hiring decisions support where the organisation is heading, not just where it has been. 

Building flexibility into team structures and role design 
Consider how delegation, phased hiring, or adaptable role scopes can help the team respond to fluctuating demand without compromising governance or quality. 

Taking this approach allows legal teams to manage risk more effectively, maintain pace as activity increases, and reinforce their role as trusted partners to the business. 

How Larson Maddox supports in-house legal teams during market change 

Larson Maddox works with in-house legal teams across the UK and around the world to align hiring and resourcing strategies with changing market conditions. We advise on how economic changes translate into legal demand, helping legal leaders plan team structures that support growth without increasing exposure. 

Our consultants provide insight into candidate availability, compensation expectations, and role design, enabling legal teams to make informed hiring decisions ahead of demand, rather than in response to it. 

If you are planning your talent strategy and assessing how declining interest rates may affect your legal team in 2026, you can request a call back to discuss resourcing strategy and market conditions, or submit a vacancy to access experienced in-house legal talent aligned to your organisation’s needs.