New Surveys Show Still More Talk than Action by Law Departments
Two recent general counsel surveys give us an indication of the current state of legal market. Do you want the good news or bad news first?
Below I highlight survey findings by Altman Weil and Corporate Counsel magazine. The italicized leaders are my words / interpretation of specific survey findings, quoted or paraphrased.
Here’s my take away: The bad news is that for all the talk by general counsels about controlling cost, I see little evidence of success in the data. The good news is that GC still have plenty of opportunity to do better. And while law firms may have less to worry about than they think, ones that offer creative and value-enhancing services have a good shot at gaining share.
The survey highlights:
- Budgets Up. More than one-half of law departments had higher budgets in 2011 than in 2010, with the median up 7%.
- AFA Limited. “84% of law departments report using some non-hourly fee arrangements… Non-hourly fees accounted for 14% of total fees”.
- Light Pressure on Law Firms. CLOs do NOT think law firms “are at all serious about changing their service delivery model, rating them a median 3 on a 0 to 10 scale.” But on the same scale, they assess themselves at 5 for pressuring firms.
- Limited Law Firm Evaluation. “Only 35% of law departments regularly and formally evaluate outside counsel”.
- Big Opportunity to Expand Offshoring. 10% “offshored some of their legal work in 2011, and 91% expect the amount of work offshored to stay the same or increase next year.”
Taking Your Measure in Corporate Counsel Magazine (1 Dec 2011), reports on its GC survey (click on PDF link in article for survey details). Findings include:
- Limited Use of Metrics. “Only a third of respondents said their departments had set up performance measurements and benchmarks.”
- Budgets Up?? The survey found 27.6% of departments cut their 2011 budgets; of these, the weighted average cut was 9.1%. The survey does not report on whether the 70%+ that did not cut had increases and, if so, how much.
- AFA Limited. 75%+ “of legal departments surveyed are initiating talks with their law firms over alternative fee arrangements, but these rarely bear fruit”
So why the title “New Surveys Show Still More Talk than Action by Law Departments?” Altman Weil’s survey found that the highest 2012 priority for law departments will be controlling costs. This has been a high priority for several years but the I just don’t see it reflected in the actions GCs reported in these two surveys.
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