Corporate law departments are increasing their internal budgets, hiring more lawyers and paralegals to staff those departments and decreasing their use of outside counsel according to legal consultancy Altman Weil’s 2010 Chief Legal Officer Survey. The survey was Altman Weil’s 11th annual survey of chief legal officers (CLOs).
Sixty-three percent of the CLOs surveyed in September and October 2010 indicated that they had increased their internal budgets from 2009 to 2010, the firm said. Forty-one percent plan to hire new in-house lawyers in the next twelve months and 32% will increase the number of paralegals on staff. In the same time period, 29% plan to decrease their use of outside counsel.
These results highlight a shift of perspective among CLOs. “Law departments are still going to rely on outside counsel for many things, but they are increasingly serious about finding more cost-effective ways to serve their clients – and that includes adding more internal resources,” the survey said.
Law departments continue to increase their use of alternative fee arrangements (AFAs), Altman Weil said. In 2009, 77% of chief legal officers used at least some alternative pricing for work done by outside counsel, while, in 2010, 81% report that they will do so. On average, 11.9% of outside counsel fees were based on non-hourly pricing in 2009. Lawyers estimated 14.5% of fees will have a non-hourly basis in 2010.
For the second year in a row, survey respondents were asked to rate how much pressure corporations are putting on law firms to change the value proposition in service delivery, and in turn how serious law firms are about changing their service delivery model. The survey found no change from the 2009 results. Law departments assessed their own desire for change at a median of five on a scale of zero to 10 and scored law firms at a dismal three on the same scale. “Clearly CLOs believe there is still a long way to go to change the traditional business model that has been practiced by law departments and their law firms for decades,” the survey concluded.