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Corporate law departments experienced only a modest increase in their total spending in 2004 even as their IP litigation expenses soared. Those are among the key findings from Hildebrandt International’s 2004 law department survey. The study, which looks at 109 departments at companies with a median of $10 billion in revenues, found a 6 percent median rise in total legal spending over the prior year. Jonathan Bellis, a senior director in Hildebrandt’s law department consulting practice, is a little surprised by the relatively small increase in overall spending. After all, he says, “It’s not like legal demands have abated.” Indeed, corporate governance reforms and heightened scrutiny due to recent scandals have placed even more pressure on law departments. But, says Bellis, GCs “have put in place a lot of things” to limit legal spending. One area where they have to break the bank, however, is IP litigation, which increased 32 percent over the previous year. Bellis says that expenses in this area are always hard to contain because many intellectual property cases threaten a company or one of its major products. As a result, businesses are inclined to spend whatever it takes to represent their corporate interests. Hildebrandt’s survey also asked general counsel whether they expected their internal staffing to increase or decrease in the coming year. Forty-five percent of the responding GCs said they anticipated increases in 2005. In the 2003 survey, only 1 percent of responding GCs said they expected staffing increases in their law departments for the coming year. PERCENT CHANGE IN OUTSIDE COUNSEL SPENDING (all numbers represent group median) Excluding IP Litigation 1% Nonlitigation 15% Intellectual Property Litigation 32% Nonlitigation 1% Expectations for in-house staffing changes in the coming year Increase 45% Stay the same 44% Decrease 11% Catherine Aman is an editor at Corporate Counsel magazine, which is affiliated with GC California magazine.

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