Executive Summaries » Law Department Spend Tilting In-House

Law Department Spend Tilting In-House

February 23, 2015

According to the 2014 HBR Law Department Survey, total legal spending, which includes money spent on inside and outside counsel, increased by only two percent worldwide. This is a percent less than what was reported in the 2013 Survey and three percent less than in the 2012 Survey. But inside legal spending levels increased notably, by five percent worldwide.

This is in line with a trend that began after the financial crisis in 2008. Law departments are becoming more internally focused, keeping more work in-house and in many cases growing the staff to support it. This year’s survey shows continued growth in general business/commercial lawyers. However, the results also point to the beginning of what could be an interesting staffing trend: handling more specialist work in-house. Twenty-eight percent of law departments reported an increase in the number of litigation attorneys, compared to 21 percent from last year’s survey.

The survey results indicate that the top three methods employed to control costs are alternative fee arrangements (AFA), keeping more work in-house and establishing stricter internal guidelines for outside counsel spending.

Of these, AFAs and keeping more work in-house yielded the most cost savings. For two years in a row, the survey revealed that AFAs make up 10 percent of total outside counsel spending. Fixed-fee-per- matter is once again the most widely utilized AFA. The savings realized through the use of AFAs inched slightly upwards compared to the 2013 results.

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