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Outside Counsel Spending Projected to Drop by 4.3 Percent Next Year
The National Law Journal
October 09, 2009
Image: Photodisc Blue
A new study projects a 4.3 percent slide in corporate spending on outside counsel next year, on top of this year's 10.8 percent drop.
Outside counsel spending dropped from an average of $20.8 million in 2008 to $18.5 million this year and is projected to dip to $17.7 million in 2010, according to the "BTI Premium Practices Forecast 2010: Survey of Corporate Legal Spending" study by Wellesley, Mass.-based legal consulting shop BTI Consulting Group.
According to the study, the corporate counsel strategies likely to drive the legal services market next year include developing cost-effective compliance strategies; resolving litigation; focusing on early case assessment; and crafting new strategies to manage outside counsel.
The projected spending drop continues a focus on cost control that corporations started implementing in 2007, said BTI President Michael Rynowecer.
There's still an imbalance between supply and demand, but a slight boost in a few practice areas such as regulatory work and litigation indicates the imbalance may be leveling off, he said.
"The fact that we're seeing a couple of practices showing a pickup would suggest that we may be nearing equilibrium, at least for the moment," Rynowecer said.
Based on corporate spending plans, the study projects modest growth in several law firm practice areas, including 3.4 percent growth in regulatory work; 2.3 percent in litigation; and 1.4 percent in intellectual property litigation.
Regulatory work, in particular, is a tremendous source of business right now, Rynowecer said.
"Every company is trying to develop industry-specific and company-specific regulatory strategies," Rynowecer said. "They're looking towards their law firms. [It's critical] to get a strong understanding of your clients' companies at an operating level."
Several practice areas are expected to sharply contract, including real estate by 12.4 percent; corporate by 10.2 percent; intellectual property transactional work by 8.6 percent; tax by 7.8 percent; and environmental by 7.4 percent.
The continuing soft economy and corporate spending responses to it will drive declines in those five areas. An increasing percentage of corporate and intellectual property transactional work will be routine, for example. Companies are also striving to keep more legal work in house, including in the tax arena.
BTI's results were based on 200 interviews with corporate counsel between June 13 and Sept. 4 at companies with an average revenue of $21.9 billion and a median revenue of $4.3 billion. The sample includes 20 percent of the companies listed on the Fortune 500.
