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BOSTON-Driven mostly by outside legal services costs, corporate law department spending increased between 7% and 7.9% over the past year, according to recent surveys by legal consultants Altman Weil Inc. and Hildebrandt International. Hildebrandt’s survey of 201 companies pegged the average legal department spending increase at 7%. In a study conducted with LexisNexis Martindale Hubbell of New Providence, N.J., Altman Weil Inc. tracked a 7.9% jump in fiscal 2005 at 138 companies. Although in-house salaries and staffing are on the upswing, much of the pie is allotted to outside law firms. The median company in the survey conducted by Somerset, N.J.-based Hildebrandt shelled out 61% on outside spending and 36% on inside spending. Outside spending per lawyer rose by 5.5% to $602,070, according to Altman Weil of Newtown Square, Pa. International law rises For the first time, international law topped the list of projected high-demand practice areas for outside legal services, moving ahead of mergers and acquisitions, regulatory matters, commercial contracts and intellectual property, according to Hildebrandt. Business is becoming more global and the legal work required to support international expansion is costly, said Jonathan Bellis, the co-chairman of Hildebrandt’s law department consulting practice. “Hiring and expansion activity, particularly in Asia-Pacific, is a big driver of [legal services] growth,” Bellis said. Hourly rates are on the upswing, according to both surveys. When asked about the average hourly rate for its top three billing firms, the median response across all firms was $343 this year, $325 last year and $304 two years ago, said Hildebrandt’s Bellis. “There’s continuing pressure from the outside counsel to raise rates,” he said. The fortunes of in-house lawyers also improved over the past year, with cash compensation, including salary and bonus, up by an average of 8%, with the largest increases at the most senior and most junior levels, according to Hildebrandt. The increase exceeds the normal annual cost of living increase across all industries, Bellis said. The number of in-house lawyers per billion dollars of company revenue climbed to 3.49, up from 2.93 in 2004, with higher staffing in the health care and information industries, according to Altman Weil’s survey. Total law department spending per inside lawyer, including costs for external legal services, reached $914,229, according to Altman Weil, and more than $1 million per U.S. attorney, according to Hildebrandt.

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