Legal consulting firm Altman Weil recently released its annual Chief Legal Officer (CLO) Survey. Now in its 19th year, the CLO Survey “provides insights into the state of in-house law departments from the perspective of their chief lawyers. The survey identifies trends, highlights and emerging issues, and explores the reasons behind the findings” (AltmanWeil CLO Survey Summary, read here).
One main trend included in the survey is budget and spending for corporate legal departments. From 2017 to 2018, fifty-three percent of law departments saw an increase in total spending. Nearly half of that spending was on outside counsel, and this will most likely ring true for the foreseeable future. In fact, 41% of CLOs said they expect increased spending on outside counsel for 2019.
Due to the increased pressure on CLOs to run their departments like a business unit, the need to increase efficiency and control costs has been bumped up on the list of priorities. CLOs are considering alternatives to hiring outside law firms to bring down costs and maintain a higher quality of work. Managing cost, efficiency and quality requires a constant balancing act when it comes to who is doing the work.
This year, 36% of all law departments are bringing some work back in-house that was previously done by outside law firms. They are also making use of temporary lawyers to do work on an as-needed basis, and hiring paralegals and other para-professionals to handle a portion of the work load. Greater uses of para-professionals and temporary lawyers are rated as second and third most effective among law department efficiency efforts (first is employing an operations manager).
Below are results from the 2018 survey:
Hiring temporary attorneys can be very effective from a cost perspective as well. According to the CLO Survey, of the departments that used temporary attorneys as an initiative to cut costs, 72% said it resulted in a significant improvement. Rather than paying the high costs of law firms, departments only pay for the hours that they need someone. The quality of work is higher because not only is the temporary attorney focused only on the needs of the department, they also can be hired based on their skill set and specialized experience and knowledge. When a department has a special circumstance where hiring permanent staff doesn’t make sense (temporary workload increase, FMLA/maternity events, new area of practice), temporary attorneys can be a great solution.
While law department spending continues to go up, there is much more attention being placed on efficiency, cost control and quality. Chief Legal Officers in many departments are instituting big changes to improve the overall performance of their team. Outside spending is a big piece of that. If you’re inspired to read the entire report, go here.