Image: Phil Foster
In recent years, as law firms adopted more corporate management practices and then drastically downsized, a result of the Great Recession, in-house legal positions became the hot ticket for many attorneys. Company jobs looked particularly attractive to associates bogged down by crushing billable hour requirements. It's not hard to see why: Law departments offered the promise of better work/life balance and the opportunity to become more involved in a client's business.
But as workloads continue to rise and hiring and budget increases don't necessarily keep pace, is the pressure inside the nation's legal departments now rivaling that of law firms? Daniel DiLucchio Jr., a principal of Altman Weil Inc., has been a consultant to both corporate law departments and law firms for more than 25 years, and he gives a qualified yes. "The workloads I see in-house are growing," he says. "They're getting pretty high."
Workloads are increasing so much that some lawyers nearing retirement age have confided to DiLucchio that they're ready to call it quits. Under ordinary conditions, he says, those lawyers might have stayed with the company a few more years. Instead, says DiLucchio, "they're thinking about retirement."
An annual survey conducted by ALM Legal Intelligence (ALI), a sibling organization of Corporate Counsel magazine, tracks workload increases and other legal department trends. And this year's results are sobering. Seventy-one percent of respondents to the 2012 edition of the "Law Department Metrics Benchmarking Survey" said their workloads were heavier over the past year. More than half said the load had increased by at least 10 percent, with almost 7 percent indicating that they had experienced a 30 percent or greater increase. Those findings are an improvement from a year ago, when 83 percent of respondents saw an increase in work.
But it's not all heavier workloads and a grinding pace. There's also a lot of good news in the report, which is based on data collected from 66 companies between May and July of this year. Hiring is up, and fewer companies trimmed budgets or reduced the size of their departments than did so the year before. Fifty-one percent of companies hired new lawyers last year, compared to 44 percent in 2010. Of all companies surveyed, 24 percent trimmed their budget, compared to 27 percent the previous year. And while 17 percent of companies reduced the size of their department in the previous survey, this year just 6 percent made reductions.
Numbers like that are what DiLucchio would call "glass-half-full" findings. The flip side of the hiring increase is the harsh reality that 49 percent of companies hired no new lawyers in 2011. Another 22 percent hired just one. "At least they're not continuing to downsize," he says.
As the economy improves and legal business and spending pick up, in-house lawyers need to work not only harder, but smarter. A key measure of efficiency, the number of full-time lawyers and staff in the legal department per $1 billion in revenue, was seven on average in 2011. That's a slight increase from the average of 6.4 a year earlier.
But efficiency isn't necessarily declining. Lauren Chung, senior director in the law department consulting practice of HBR Consulting, says departments are absorbing work that would have been farmed out in the past. For the first time in years, she's seeing outside firms insist on rate increases. "Outside counsel spending is going up," she says, "but that doesn't mean that more work is being outsourced." As the cost of doing business increases, departments are looking to get more bang for their buck by using internal resources. "Keeping work in-house is the most widely adopted cost-savings measure," Chung says.
Medtronic Inc. general counsel D. Cameron Findlay knows a thing or two about making the most of limited resources. The medical technology industry in which the company operates poses growing legal threats and regulatory requirements. Despite an increased workload, Findlay says, the response from his financial colleagues has been "That's all well and good, but we want you to get all this new work done without any additional resources, or perhaps with even fewer resources than you had before."