Trends Affecting In-house Lawyers to Help You Get More Business
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The survey “Law Department Metrics Benchmarking Survey” was conducted by ALM Legal Intelligence (see http://bit.ly/9tqy2P), which has monitored trends of in-house legal performance since 1972. The survey is based on data collected from 61 US companies throughout 2009, in a dozen industries, with annual revenue of less than $100 million up to $5+ billion.
Six trends affecting corporate clients
Trend No. 1: Law departments are getting bigger or staying the same size. According to the survey, 32.8% of respondents have reduced the size of their law department in the last 12 months. The key takeaway here is that 67.2% of departments are bigger or the same size. This means that more corporations are taking work in-house and staffing up to do so.
Trend No. 2: In-house lawyers are working harder. 70% of in-house lawyers say their workloads have increased during the past 12 months. This underscores Trend No. 1, that work is staying in-house. What this means to law firms is that there is less demand for routine corporate legal services like environmental, tax, real estate, corporate and patent prosecution matters.
Trend No. 3: In-house law departments have had their budgets cut. According to the survey, 62.3% of law departments implemented budget cuts in 2009. This means the lawyers at a potential corporate client are doing more with fewer resources. It’s an awful position to be in. A law firm that could ease the pain of in-house counsel would be welcome indeed.
Trend No. 4: A majority of a corporate law department’s budget is for fees for outside law firms. According to the survey most companies spend 58% to 65% of their budget on outside law firms. This is good news, because it means there are fees to be earned from the overburdened law departments.
Trend No. 5: The higher a company’s revenues, the more law firms it uses. As you can see from the chart below, the sweet spot is companies that have annual revenue of $5 billion or more:
Trend No. 6 – Companies are paying fees to outside counsel in alternative fee arrangements. Roughly 20% of companies are spending 37% of their legal fees in alternative arrangements.
The research found that there are four primary criteria that corporations use when they select outside counsel. They are, in order:
- Firm specialization – 34%
- Cost – 19%
- Responsiveness – 18%
- History with the company – 12%
Interestingly, criteria that didn’t matter were firm reputation, partnering capabilities and diversity.
