Survey: In-House Legal Departments Cut Back
Corporate legal departments are cutting back, reducing the number of in-house lawyers they employ and slowing the pace of spending on outside firms. This is the key finding of the just-released 2008 edition of legal consulting firm Hildebrandt International's annual Law Department Survey. "After years of stability surrounding legal staffing and spending, law departments are cutting back," said Lauren Chung, survey director and editor. "Total legal spending increased at a slower pace than prior years. The most significant change was with inside spending. More law departments reported a decrease in the number of lawyers. This has led to slower growth in inside spending."
These findings appear to mirror those of a study of Boston-area in-house counsel to be released later this month and reported today in the National Law Journal.The study by Wellesley, Mass.-based BTI Consulting Group, "Boston Law: Leaders, Contenders & Corporate Spending Forecast," finds that Boston-area corporate executives and in-house counsel anticipate
slow legal spending growth for the region's nearly $2 billion legal
With regard to the Hildebrandt survey, among its key findings were:
- Law departments are cutting back on spending. While total legal spending increased by 5 percent in the U.S., that is down from rates of 6 to 7 percent in the four prior years. The median company spends $4.3 million per $1 billion of revenues on legal spending in the U.S., a figure that has changed little over the past three years. Inside spending rose by 5 percent in the U.S., down from the 8 percent increase reported last year. Outside counsel spending grew by 2 percent in the U.S and by 3 percent worldwide.
- Lawyer staffing is down. The median company employs 3.8 lawyers per $1 billion of U.S. revenues and 3.3 lawyers per $1 billion of worldwide revenues. In the four previous surveys, this number ranged from 4.2 to 4.7 lawyers per $1 billion of U.S. revenues.
- No change in management of outside counsel. The percentage of companies reporting some level of convergence activity has been stable over the past two years, at around 56 percent. Alternative billing arrangements remain the exception rather than the norm, used with only 8 percent of outside counsel. Most companies (67 percent) expect no change in the number of law firms they plan to use in 2008. Nearly a third (29 percent) anticipate a decrease in the number of law firms they will use. Only 4 percent plan to increase the number of firms.
- Cash compensation is up 8 percent at all in-house levels. The average total cash compensation for an in-house attorney is $236,000. For a chief legal officer, it is $900,000. General counsel received the highest average increase, 14 percent, taking them to just over $700,000. Total compensation including long-term incentives increased 10 percent, averaging nearly $2 million for CLOs and $1.5 million for GC.
The survey looked at 223 companies in 18 industry groups, with the median being a company with over $9 billion in worldwide revenue and more than 20,000 employees. The survey reports on nearly 7,000 lawyers and 6,500 non-lawyer professionals, legal assistants and support staff. The survey will be posted at www.lawdepartmentsurvey.com, although as of this writing it is not yet there.
Posted by Robert J. Ambrogi on September 26, 2008 at 03:41 PM | Permalink
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