It’s been a long, difficult few years for U.S. corporate legal departments. Following the financial crisis and the Great Recession, many general counsel had to make painful cuts to their ranks and tighten their purse strings.
But that might just be over.
In fact, the 2013 version of an annual survey from NLJ affiliates Corporate Counsel and ALM Legal Intelligence indicates that many law departments have shifted gears successfully from recession mode to recovery mode, as certain benchmarks continue to improve.
Although certain indices have improved, this year’s Law Department Benchmarking Survey doesn’t depict a perfect situation for in-house counsel. Some departments are still struggling, adjusting to a new normal by keeping closer tabs on their outside counsel while bringing more work in-house.
D. Cameron Findlay, general counsel of food and agriculture giant Archer Daniels Midland Co., tends to agree with the survey’s positive yet measured view. “There is modest recovery going on out there in the economy, and therefore there’s modest recovery in law department hiring and law firm billing,” he said. “But there’s not any irrational exuberance out there that we’re on some big upswing.”
This year’s benchmarking survey shows modest but promising gains for in-house attorneys through two key benchmarking categories — budget and staffing. Of the departments that responded, 59 percent hired new attorneys during the past year, up from 51 percent last year, 44 percent in 2011 and 39 percent in 2010. Another important indicator, the number of lawyers and legal staff per $1 billion in revenue, got a boost this year as well, from an average of seven staff members in last year’s survey to an average of 8.3.
As for budgets, only 21 percent of the departments surveyed said they would be cutting back in the coming year, down from 24 percent last year, 28 percent in 2011 and 33 percent in 2010. “Together all of that signals a change, and I think some positive momentum that we finally can start talking about,” said Kris Satkunas, director of strategic consulting at LexisNexis Group, which sponsored the survey.
Findlay’s legal department is one of those that likely will hire in the near future. “We’re not going to go on a hiring binge,” he said. “My finance department wouldn’t let me. But we’re going to very prudently grow the legal department to minimize the mix of total in-house and outside cost.”
Like many general counsel, Findlay, who has been with Archer Daniels Midland for a only few months, is fine-tuning the balance between inside and outside work. “I would be looking to fill gaps across the board, both to do more of the work in-house but also to help us watch over law firms,” he said.
Michael Baroni, general counsel at Palace Entertainment Holdings LLC, an international amusement park company, said that in his experience, smaller and medium-sized companies are still squeamish about the up-front costs of hiring more legal help. “I feel like things are still very tight, and that even though companies are picking up, they are still looking to squeeze costs from both outside legal expenditures and in-house costs,” he said.
At Palace, he still is expected to keep most legal work close to home and be the point person for all areas of the law, “until something heats up in a major way” — meaning that he ends up taking care of most every matter in-house, save litigation and mergers and acquisitions.
Baroni is far from the only general counsel with his nose to the grindstone. Growing workloads were clearly part of the equation for in-house attorneys in 2013 — 81 percent said their workload increased during the past year, with most saying it rose by 5 percent to less than 10 percent. In 2012, the percentage of those experiencing an increased workload was 71 percent.
Rebekah Mintzer reports for NLJ ­affiliate Corporate Counsel. Contact her at firstname.lastname@example.org.