Companies shift legal spending in-house as more embrace 'in-sourcing'
Companies are increasingly shifting legal spending in-house, according to a new analysis.
This year companies are redirecting an estimated $1.1 billion of legal spending from outside law firms to in-house legal departments, the Wall Street Journal (sub. req.) reports, citing an analysis by BTI Consulting Group Inc. The shift was at its peak in 2012, when $5.8 billion in legal spending was shifted in-house.
This year about 58 percent of larger companies are sending more legal work in-house, compared to 50 percent that were doing so in 2013, BTI Consulting says.
Another indication of the trend comes from a survey of 1,200 chief legal officers, the story says. Sixty-three percent said they are now “in-sourcing” legal work that used to go to law firms or service providers. The Association of Corporate Counsel cited the survey in a report released earlier this year.
Walgreen Co. is an example of the changes afoot. Its general counsel, Thomas Sabatino, told the newspaper that the company moved more work in-house in a strategy change in April 2013. Now staff attorneys sit in on meetings and act as quarterbacks for litigation and transactions handled by large law firms. In-house lawyers, however, handle the rest of the legal work, including the acquisition of individual pharmacies and small pharmacy chains.
“We did almost 100 of those last year,” Sabatino told the newspaper.