Survey: Legal Department Spending Took Rare Drop in ’09

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Law departments reduced their total legal spending for the first time in 10 years in 2009, according to the 2010 Law Department Survey from Hildebrandt Baker Robins.

According to the survey, the main cause for the drop was the reduction in use of outside counsel. In fact, more than 60 percent of those surveyed trimmed their use of outside counsel; while at the same time, slightly increasing internal legal spending and staffing.

“The survey results confirm what we are seeing every day in our consulting practice with law departments of all sizes, sectors, industries and locations,” said Jonathan Bellis, who chairs Hildebrandt Baker Robbins’ Law Department Consulting practice. “As shown in our survey last year, law departments began to adopt a wide range of management practices to reduce and control internal and external legal costs. These efforts have continued, resulting in an overall decrease in total legal spending for the first time in the past 10 years of the survey.”

  

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Hildebrandt Baker Robbins said reducing the use of outside counsel, which makes up nearly 60 percent of total legal spending, is likely to continue in the foreseeable future.

“We expect that efforts to reduce spending will continue, particularly with outside counsel spending, which makes up nearly 60 percent of total legal spending,” said Lauren Chung, survey editor.

Total legal spending in 2009 was down 1 percent in the U.S. and 2 percent worldwide from the previous year. The median total legal spending was $24 million in the U.S. and $33 million worldwide. Total legal spending as a percent of revenues worldwide was 0.4 percent.

According to Hildebrandt Baker Robbins, the 2010 survey achieved an all-time high in participation. The survey is designed to provide comprehensive data on legal spending, staffing, organization, compensation and management practices. The 2010 survey also reports information on management practices that law departments have adopted in response to the current economic environment.