Confronted with orders to control legal costs and rein in expenses, general counsel throughout California are now taking dramatic steps that were virtually unheard of only a few years ago. Salaries are being decreased. In-house lawyers and staff are getting pink slips. Law firms are being pressured to lower their hourly rates. And some companies are even turning to (gasp!) solo practitioners for some outside legal work. And while these and other cost-cutting measures are a direct response to the slumping economy, they may also trigger a permanent shift in the way that companies purchase and provide legal services even after the economy has recovered.

In a recent survey, 75 percent of GCs around the country indicated that their departments are facing budget cuts averaging 11.5 percent for 2009. Another 16 percent of the GCs reported that their budgets would increase this year, though by a smaller percentage than in previous years. Conducted by Altman Weil, the legal consulting firm, the survey, which was conducted last November, included responses from 115 GCs.

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