My prior post A Former GC Explains Why BigLaw Keeps Getting Business prompted a comment from Pam Woldow of Altman Weil, herself a former GC. She reports that law departments are, under pressure from the current crisis, shifting some work away from BigLaw. As I read her comments, this may be a trend not easily reversed even when good times return. 

A word of background: my blog is re-published on Legal Onramp (LOR), an online forum and resources (aka social network) for legal professionals. Ms. Woldow replied at LOR and I have, with her permission, reproduced her comment:

“As a former GC and now in the role of consultant to GCs of major corporations, I am seeing the move of certain types of work to regional firms and away from BigLaw. With the budgeting season in full swing for some companies and completed for others, we are being contacted to help GCs meet their newly reduced 2009 budgets by finding more cost effective ways to obtain legal services.

While Ms. Katz [quoted at length in my prior blog post] identifies the reticence that some GCs may have about moving work to regional firms to obtain better value, including the CYA aspect, I am finding that confident GCs who have a clear understanding of their legal spend are motivated to save their companies money and meet their budgets — rather than merely cover their backsides.

If a GC has undertaken a thoughtful analysis of the legal spend, s/he will find there are certain types of spend, e.g., routine employment, products matters, IP issues, that lend themselves to movement to regional firms.
Collectively, these matters (though each may be fairly low dollar risk) can add up to a meaningful amount of the overall spend. Our GC clients report that they can achieve a 20%+ savings by moving these types of matters to excellent regional firms and away from BigLaw firms. In a year where many corporate legal budgets have been cut by 11.5% on average (see, a major savings in one part of the legal spend can make the difference between meeting or blowing the budget.

Once the GC and the selected regional firms develop trust, we often see more important matters being moved to those firms. For boardroom-level matters or bet the company issues, those will likely stay firmly rooted in the BigLaw firms.

It may take some readjustment to GC’s thinking and habits to re-deploy the legal spend, but the economy is forcing even hallowed legal departments to get on board with being efficient and using resources wisely.”