As 2014 comes to an end there have been a number of legal industry studies and surveys published. Several of these studies have focused on law departments – taking a pulse check of inside counsel.
This naturally makes perfect sense given corporate counsel – the law firm clientele – is the “center of gravity in the legal industry.” Even so, it is an overwhelming amount of data. To simplify things, we’ve culled through these reports – and secondary sources – to provide a high level summary for an at-a-glance look.
Where opportunity permits, there are links to additional resources for those items of further interest to readers.
In reviewing each study – and pouring over our own data – we can’t help but notice some common themes.
- Inside counsel is cautiously optimistic about the economy
- Cost containment remains top of mind
- Law departments have modest expectations for budgets and staffing
These themes may well provide a glimpse of what’s to come in 2015. Here are summaries from five law department studies:
1. BTI Legal Spending Outlook 2014 | BTI Consulting
BTI Consulting interview more than 300 interviews with senior legal staff from Fortune 1000 companies from March to September 2014. The study found large companies “are on track to move another $1.1 billion in legal spending in-house” which is in addition to the nearly $6 billion it brought inside in 2013.
As noted in a subsequent announcement, the study also found a “50% decline in bet-the-company matters over the past 2 years.” Responses indicated corporate counsel is open to replacing core litigation firms and that “the law firms winning new work are now winning a greater portion of work than in prior years.”
2. 2014 Chief Legal Officer Survey | Altman Weil
This annual survey was conducted in September and October of 2014 and tallied 186 responses from corporate legal departments. The survey found that the legal services industry continues to be a “buyers’ market.”
The report says, as a result of the recession in 2008, legal departments have faced resource constraints and have exercised greater leverage over legal pricing. Negotiating discounts – most commonly of 6%-10% – and the use of fixed fees or AFAs were the primary means of exercising such leverage and managing costs. Notably, 40% of respondents said they have shifted work to in-house staff.
3. Legal Department Operations Survey | LexisNexis CounselLink
This survey found a renewed sense of optimism within legal departments, but also noted a continued focus on value. More than 70% of respondents – mostly corporate attorneys – said this year had been better than last. However, this optimism isn’t likely to parlay into bigger budgets as 61% also said reducing outside counsel spend is the top goal. Other findings included:
- 54% of respondents said they plan to bring more work in-house.
- Regulatory compliance and improving operational efficiency are the top challenges.
- About one-third anticipate an increase in budget and staffing over the next 12 months.
Additional Sources: The survey results are freely available for download here: 10 Telling Statistics from Optimistic Legal Departments; Corporate Counsel, Inside Counsel and Law360.
4. 2014 Law Department Metrics Benchmarking | ALM
This survey is conducted annually by ALM and Corporate Counsel is currently featuring an interactive graphic of the survey results. Here are a few of the findings that have been publicly published:
- In-house workload reversal. Just 25.5% of respondents said their workload had increased. This is a near complete reversal of the findings from the same study in 2013, where 81% said the volume of work has increased.
- Law department budgets. The vast majority of respondents say they did not experience budget cuts in 2014 but about one-fifth (19.1%) did. Of those, just 12.5% of respondents said those cuts were 15% of budget or more.
- Top issues in 2015. Eleven possible responses are listed in response to the question “What Issues do you expect will be of most concern to you in 2015?” Of those, the top three are: 1) supporting company growth (44%) 2) doing more with fewer resources (37%) 3) handling an unforeseen crisis (30%).
5. 2014 Canadian Lawyer Corporate Counsel Survey
North of the border, survey of “320 law department leaders” by Canadian Lawyer Magazine also found cost pressures were prevalent:
When asked what measures they put in place in the last year to manage costs, 42.9 per cent said they brought more work inside with 28.3 per cent indicating they came to a new fee arrangement with their outside counsel.
Interestingly, when asked about outside counsel selection criteria – 75.7% base their decision on “specific lawyers,” 72.4% identified practice specialization and just 33.8% cited law firm reputation:
While some noted they choose based on parameters set in RFPs, one survey respondent summed it up this way: “I choose the lawyer, the firm is immaterial.” Some of the comments received on this question emphasized the importance of long-term relationships and some indicated the formula looks a bit like this: “Lawyers with specific skill sets, strong relationships, commitment to innovative service delivery, and support of in-house counsel.”
Additional Sources: The study is freely available on the Canadian Lawyer Website – Seeking alternative arrangements.
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While all of these studies focus on corporate counsel, there have also been a number of studies focused on law firms. In the next week or so we’ll take a look at some of these; in the meantime, what might you add to this list?
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