In-House Legal Work to Increase Over the Next Year

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Summary: Corporate law departments have reported in a recent Altman Weil survey that they will cut down on outside counsel spending over the next year.

Altman Weil Inc. has released its “2014 Chief Legal Officer Survey,” which shows that 85 percent of chief legal officers surveyed will move work from outside counsel to in-house legal staff members, according to Corporate Counsel.

  

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According to the survey, “corporate law departments are wielding their buying power to drive down expenditures on outside counsel, and innovating from within to further control costs.”

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The survey said that the recession put limits on in-house legal department resources, but also gave chief legal officers more leverage against outside counsel.

“Chief legal officers are buyers in what is currently a strong buyers’ market,” the survey says.

Data from the survey found that half the law departments involved received price reductions from outside counsel ranging between six and 10 percent. More than one-third of the firm that responded said the discounts they received were more than 10 percent.

Close to 40 percent of the chief legal officers surveyed said that moved their work from outside counsel to in-house staff members over the past year. Another 36 percent of those surveyed said that the work was assigned to lower-priced firms.

The survey also found that 26 percent of law departments said that they plan to decrease outside counsel use over the next year, while 14 percent said they will increase the use of outside counsel.

“This continues a seven-year survey trend in which decreases in the use of outside counsel have been reported at about twice the rate of increases,” the report said.

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There were 1,189 corporate law departments invited to take part in the survey, of which 86 did.

Between 2013 and 2014, 54 percent of law departments decided to increase internal budgets, while 48 percent decreased spending on outside counsel.

Chief legal officers cited “greater cost reduction,” “more efficient project management,” and “improved budget forecasting” as service improvements they would like to see from the outside counsel they hire.

The report concluded that respondents provided mixed opinions for the best way to mold the inside-outside counsel relationship, “but the fact that only 4 percent are content with the status quo is an unambiguous indicator that the old model is not sustainable.”

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