Corporations Spend More on In-House Lawyers, Less on Outside Firms
Corporations appear to be cutting back on fees to outside law firms as they beef up their own in-house legal staffs. A new survey highlights the shift.
Spending on outside law firms by corporate legal departments dropped by a median of 9.1 percent last year, while outlays for in-house legal departments increased by 11 percent, the American Lawyer reports in a story on the survey findings.
Rising legal fees could be the problem, the story says. Outside law firms hiked hourly rates last year by 6.5 percent, the highest percentage in seven years, the survey found.
The survey, conducted by the Association of Corporate Counsel and Serengeti Law, also found that more in-house counsel are requiring specific terms of retention by their outside counsel, according to a press release (PDF).
About a fourth of the respondents are going further to manage outside counsel by reducing the number of firms they hire, issuing competitive bids for new work, requiring minimum levels of experience for associates working on their projects, and getting discounts for early payment of bills, the press release says.
While alternative billing is getting lots of publicity, most corporations are still being billed on an hourly basis, although the fees may be discounted.
The study gathered responses from 337 law departments in small to large U.S. companies with median revenues of $350 million. An increased number of small companies responded to the survey, but the report said the results and trends are consistent with prior years.
Another recent survey found that about a third of in-house counsel were projecting an increase in legal disputes involving their companies for the coming year—and nearly 20 percent predicted the need to hire more in-house lawyers to manage the expected increase.
