Survey tracks corporate spending for outside counsel

first_img February 15, 2002 Regular News Survey tracks corporate spending for outside counsel How will U.S. corporations adjust their spending on outside legal counsel in 2002? Will the recession rein in spending, or will economic factors be less of a concern, as businesses call on outside firms more to help navigate a changing regulatory landscape and rising litigation?It turns out that companies may be headed in both directions, according to a new survey on law department spending by National Economic Research Associates.In its first annual “Legal Leading Indicators” survey, NERA found that more than a third of the country’s largest corporations (38 percent) say they plan on decreasing spending for outside lawyers, although the decrease is not expected to be dramatic. The percentage of spending on outside counsel, as a share of overall spending, is expected to slip from 53.5 percent in 2001 to 51.6 percent in 2002. At the same time, 23 percent of companies surveyed projected an increase in outside law firm spending.Even the projected decrease is not across the board. For a few key specialties, notably labor and employment and regulation, the percentage of companies that anticipate increasing outside legal budgets was greater than those anticipating a decrease. The same pattern emerged for international work — more companies than not expect to increase spending for legal work outside the U.S.Staffing changes and changes in regulation are the most important factors influencing outside counsel spending next year, ahead of changes in the economy, and far more important than “threats of terrorism,” which was cited as an important factor by only two percent of companies surveyed.For some, staffing changes simply mean more in-house hiring, according to the NERA.“We will be bringing in higher-level, in-house talent,” said one respondent to the NERA study. “More in-house counsel,” echoed another, with “more focus and closer review of outside billings.”The survey suggests that this past year found many corporate law departments at a crossroads. When asked to compare current legal budgets with 2000, 48 percent of companies reported there had been an increase, while only 18 percent reported a decrease.Looking ahead to 2002, 39 percent anticipated that outside legal spending would decrease “somewhat” or “a lot,” while 38 percent said that their outside legal spending would remain flat in the coming year.The NERA survey was based on interviews with 302 firms with annual revenues of $500 million or more. Sixty-two percent reported sales of least $1 billion, and 62 percent of respondents identified themselves as chief counsel.NERA, an economic research firm and an affiliate of Marsh & McLennan, provides economic consulting services to both in-house legal departments, as well as many private law firms.center_img Survey tracks corporate spending for outside counsellast_img

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