Corporations resumed budgeting more for legal services in 2011

A survey of corporate legal departments by the legal consulting firm Altman Weil has found that, after the financial crash of 2008 and 2009, companies are spending more on legal services.

The Newtown Square firm said 56 percent of chief legal officers surveyed in October reported they had increased their legal department budgets this year, compared with 51 percent who hiked legal spending the year before.

"These are not big changes," the national consulting firm said. "It is a shift in direction that's interesting as it may signal some softening of the hard line on spending that corporate law departments embraced in the past few years."

Respondents said there had been increased spending on both in-house legal staff and outside counsel.

The survey of 176 companies tracked roughly with the slightly improved economic climate and with the experience of law firms in the Philadelphia region.

Christopher Gibson, president of Archer & Greiner P.C., a 200-lawyer firm in Haddonfield, said that the overall emphasis of corporate legal departments remained on cost control, but that there had been some signs companies were willing to spend a bit more, and even in some instances to discuss fee increases.

"Corporations are doing a little better and the cash flow is a little better; I don't know that that is necessarily leading to much larger legal budgets," Gibson said. "There is still a great deal of cost consciousness. But you don't get the sense of slashing of legal budgets that you've had for the past several years."

Thomas A. Decker, chief executive officer of Cozen O'Connor P.C. of Center City, said the climate had improved slightly. But he said he expected the legal market to remain tight through 2012. One sign the economy still is struggling is that bankruptcy and labor-and-employment law remain among the most robust practice areas, he said.

"We are in the same position most businesses are in - anticipating little growth next year," Decker said.

Many firms were forced to forgo fee increases over the last few years, or even agree to work at discounted rates.

The Altman Weil survey found that among responding legal departments, there also had been a movement away from hourly fees and toward flat rates, contingency fees, or a combination of billing structures.

The firm said 84 percent of survey respondents had used some kind of non-hourly fee arrangement to reimburse outside counsel, compared with 81 percent in 2010.

Some 10 percent of company legal departments sent work overseas, to India and other places. The vast majority of those companies said they expected the amount of such nondomestic legal work to be about the same in 2012.

The survey also asked corporate legal departments to rank various marketing strategies for effectiveness in helping law firms obtain work.

Personal contacts were rated highest, followed by free seminars and presentations on various legal and corporate issues, documents demonstrating legal expertise, and other tactics. Social-media activity was rated at the bottom of the list.

 


Contact staff writer Chris Mondics at 215-854-5957 or cmondics@phillynews.com.