In-House Law Departments Growing

According to the 2011 HBR Law Department survey, corporations are now using more in-house attorneys than in years past in order to deal with the growing demand for legal services. The shift is primarily in effort to cut back on spend as the economy continues to recover, thus corporations are relying more heavily on larger in-house teams instead of on outside counsel. Consequently, increased numbers of attorneys that have traditionally worked in private practice are now transitioning to in-house positions.

In a statement released by HBR, they believe “law departments are recognizing that they can do more with less by building up their in-house capabilities. The Survey shows that the median fully-loaded inside hourly cost per lawyer is approximately 46 percent below the median average hourly rate of the company’s top three billing firms.” In a time of careful spending and close budget scrutiny, firms are finding numbers this compelling hard to deny.

At the same time, however, the legal profession is recovering more quickly than most. The survey highlights that more than 50 percent of respondents reported an increase in total number of legal staff worldwide between 2009 and 2010, while only 29 percent reported a decrease. Overall, 80 percent of respondents commented that their company’s legal needs are increasing, with the median expected increase in overall lawyer staffing at 10 percent. The growth also seems to be coming sooner rather than later, as 40 percent of those surveyed expect to hire more lawyers in the coming year. Additionally, more than 33 percent of corporations attach high importance to expanding in-house teams, compared to only 11 percent that are looking to increase the use of outside counsel.

HBR Senior Director and Survey Editor Lauren Chung added the following about the data gathered in the survey: “This finding serves as one of the important considerations in building a business case for adding more in-house counsel to handle the increasing workloads. We are hearing from our consulting clients across industries that they are limiting the use of outside counsel to high profile matters or specific areas of expertise rather than to support the growing volume of work. With the rising cost of outside counsel, we expect this trend will continue.”

This is just one of a few key industry shifts settling in as the recession ripples out and begins to rebound. Increased numbers of contract attorneys, mergers and lateral movements, along with growing in-house counsel teams look to be the way of the future. As firms continue to balance cutting costs with maintaining quality in order to spur growth, we will continue to see a rise of this same “do more with less” attitude.

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