Biglaw, Billable Hours, In-House Counsel, Job Searches, Partner Issues

Good News For In-House Lawyers (And The Law Firm Lawyers Who Love Them)

The glory days of 2006 and 2007 may never return. They call it the “new normal” for a reason.

But things at least can get better incrementally. And this is what might be happening in the in-house world, according to two new surveys. These studies report that in-house legal departments are increasing both their hiring and their spending — which could be good news for the law firms that service them, as well as all the Biglaw attorneys who dream of making the jump to in-house.

Don’t say that we never give you happy news around these parts….

Here’s a nice, concise summary, from the ABA Journal:

Two new surveys point to modest gains for in-house legal departments—in terms of hiring and legal spending.

One survey found that corporate legal departments are hiring at a rate not seen since before the recession.

The survey of 70 in-house legal departments found that 59 percent of respondents hired new lawyers in the past year, up from 51 percent in 2012, and just 44 percent and 39 percent in the prior two years. A press release has details.

Only 21 percent of the respondents were planning budget cuts in the coming year, down from 24 percent in 2012, and 28 percent and 33 percent in the previous two years.

You can read more about this first survey, conducted by ALM Legal Intelligence, over here. It also showed growth in the use of alternative fee arrangements (AFAs), but slow growth: 82 percent of companies used AFAs in the past year, up from 79 percent in the prior year.

Increased hiring by in-house legal departments sometimes spells less work for outside counsel. But spending on both appears to be growing, according to a second study described by the ABA Journal:

[A]nother survey by HBR Consulting reports a 3 percent increase worldwide in companies’ total legal spending in 2012, according to Corporate Counsel and a press release. In-house legal spending increased 5 percent, while spending on outside counsel jumped 2 percent.

In-house legal spending is growing faster than spending on outside counsel, suggesting that the trend of taking more work in-house remains in effect. That’s not exactly good news for Biglaw. But a two percent increase in spending on outside counsel, while far from robust, is decent in an age in which Growth Is Dead (affiliate link).

To complicate the picture a bit, this survey has findings on the hiring front that point in the other direction than the first survey. From Corporate Counsel:

Staffing appears to be in somewhat of a recovery mode as well, although hiring was slower between 2011 and 2012 than between 2010 and 2011. The 2013 survey indicated that globally, 52 percent of respondents hired more legal staff between 2011 and 2012, down from 57 percent between 2010 and 2011.

To sum up, the theme on all these fronts — hiring, spending, use of alternative fee arrangements — appears to be “slow growth.” That might not be so exciting, but to everyone who made it through the collapse of the financial markets and the Great Recession, it qualifies as “good news.” Slow growth is better than no growth at all.

In-house legal hiring and spending are on the upswing, surveys say [ABA Journal]
Survey Shows Law Departments on More Stable Footing [Corporate Counsel]
Corporate Law Department Hiring is Up and Expense Cuts Continue to Decline [ALM (press release)]
Total Legal Spending Up by 3 Percent Worldwide [HBR Consulting (press release)]

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