More chief legal officers plan to beef up their legal departments this year, according to the results of the Association of Corporate Counsel's 10th Annual Chief Legal Officer Survey.
But it's not a sign that the economy is recovering and budgets constraints are easing, says ACC deputy general counsel James Merklinger. Rather, Merklinger says, the added hiring most suggests that the recession is forcing chief legal officers to change the way they operate. They're bringing more work in-house, spending less on outside counsel, and boosting spending on alternative fee arrangements, the survey shows.
"This may be part of an overall restructuring that lets them be more efficient and effective, and that's a good sign," Merklinger says. "The economy has raised the awareness that it's time to do things differently."
About one-third (29 percent) of the 970 chief legal officers who responded to the survey said they're planning to add to their departments this year, up from 23 percent last year. Meanwhile, more than a third (34 percent) said they've cut spending on outside counsel.
When they have hired outside counsel, the survey respondents said they were slightly more likely last year to negotiate alternative fee arrangements to cut costs than they have been in the past. Forty-four percent relied on such arrangements in 2009, compared to 41 percent in 2008, the survey shows. And nearly four out of every five of the in-house lawyers surveyed expressed a desire to increase their spending on outside counsel under alternative fee arrangements this year.
Not everyone agrees these changes reflect a long-term trend. Chief legal officers are still being cautious in this economy, says legal department consultant Rees Morrison, president of Princeton, N.J.-based Rees Morrison Associates. Morrison argues that chief legal officers just had less work to give to outside counsel last year. "In a recession, there's just less business going on," he says.
Most chief legal officers who responded to the ACC survey would disagree. Just over half said their workload has actually increased, thanks in part to increased regulation. Indeed, 57 percent of survey respondents said they're concerned by the stepped-up scrutiny by regulators and law enforcement officials that their companies are now subject to.
Even with the recession and a heavier workload, chief legal officers said they still like their jobs. Just over 90 percent said they're satisfied with their chosen career, a figure that's up slightly from the 88 percent who said the same thing last year. That, Merklinger says, is because most chief legal officers like challenges and solving problems.
"It's a chance for them to shine. It's a chance for them to prove their value," says Merklinger. "They view it as opportunity."
