In-House Counsel Look for Efficiencies and Alternative Billing Arrangements.
In the December 2010 edition of California Lawyer, there are some interesting articles about legal budgets for U.S. corporations. Looks like, in 2009, law department spending dropped for the first time in nearly a decade, by 1% according to a survey of 252 U.S. companies in 22 industries by law firm consultants Hildebrandt Baker Robbins.
Nevertheless, a recent survey of 275 corporate counsel by Fulbright & Jaworski shows that 21% of respondents had expanded their outside counsel in the last year, with 25% expecting to see more growth there by summer 2011.
Companies also have grown their own in-house legal departments, expanding litigation capacity and taking more transactional work inside. Smaller claims prevalently seem to be more and more handled in-house. Discovery, internal reviews, and collections seems to be areas that businesses are attempting to manage from the inside.
Even with the slowdown in 2009, there is a pie chart that shows, for 2009 medians, dollars per company, U.S. corporate legal spending on in-house counsel was $9 million and on outside counsel was $14 million, compared to $24 million for all expenditures.
Reasons for tapping outside counsel were a law firm’s specific area of expertise, expanding jurisdictional capacity, and handling a heavier litigation loan.
Most of the interviewed in-house counsel put a lot of stress on using outside counsel providing the best value and results, with at least one indicating that lawyers in California metropolitan areas (with higher rates) may not be able to compete with the cost structure of firms in Virginia, Georgia, or even Chicago. RPFs and budgets are standard procedures with in-house counsel now.
One in-house counsel indicated that about 10% of her company’s legal spending was through alternative fee arrangements, with most other counsel concurring that 80-90% of company engagements were billable-hour arrangements. Most of the interviewed counsel indicated they wished more alternative arrangements would be suggested by outside counsel.
At least one in-house attorney stated that her company had a general rule that no summer intern or first-year attorneys could bill time on files.
Link to “What CG’s Really Want.”