Future Law Department Spending and Work Pattern Trends
Another day, another survey, this one of law departments. American Lawyer Magazine, Legal Onramp, and law department consultant Rees Morrison produced an interesting, forward-looking survey.
The Change Agenda: Looking Ahead (American Lawyer Magazine, Dec 2008) reports on a survey written and analyzed by Rees Morrison and AmLaw editor Aric Press, conducted on the professional social network, Legal Onramp.
Below I present a few of its findings – in graphic format – that I found most interesting, along with my comments. My interpretation differs from Morrison’s and Press’. About 65 inhousers at companies with revenues of at least $1 billion responded to these questions. All questions focus on changes expected over the next five years.
Spending Changes: LPO and Value Billing
I found interesting juxtapostions in the answers to two questions:
- “Between 2008 and 2013, ___% of our law department’s spending on outside counsel will shift from hourly (whether flat sic or discounted) fees to some form of “value” billing”. [I thought flat fee is value billing]
- “Between 2008 and 2013, ___% of our law department’s spending will move to lower cost offshore service providers, whether directly or as a subcontractor to our in-country law firms.”
As the graphs below show, almost half the respondents expect spending on legal process outsourcing (LPO) to increase. In contrast, almost 85% expect a bigger move to value billing. Given that I’ve heard endless discussion about value billing since I entered the profession in 1989, the gap between 50 and 85 is less than I would have expected.
In the tech world, there have been multiple years that were “the year of [fill in the new technology]”. But eventually the new technology did become pervasive. In contrast, in the legal market, it seems every year has been “the year of value billing”.
Legal outsourcing has only be around and in the legal discourse for 3 to 4 years. So that almost half expect to increase spending on LPO suggests it’s a trend with traction.
Legal Technology and EDD
The questions here were
- Our department will increase spending on legal automation (software and process)
- With various changes we expect, e-discovery spending will
That one-third of respondents expect to increase legal automation spending by more than 50% is a very positive development. That only one-fifth expect EDD spending to increase by more than 50% represents, in my view, undue optimism about the profession’s effort to get control over this beast. [Note that Morrison and Press interpret the dollars as nominal rather than real; that’s not how I read the results cited nor the survey as it appeared at LOR.]
The question here was “By 2013, telecommuting in our department will be at a greater/equal/lesser level relative to today.” It’s a bit hard to know how to interpret the data given the available responses, but I was amazed that 60% think it will increase. When I bring up working virtually (that is, telecommuting) with lawyers, I usually see pained looks and incredulity. Maybe the recent energy price spike had a positive impact?
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