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Big Legal Departments Foresee Legal Spend Cuts in 2015

December 9, 2014 | Posted in : Billing / Fee Guidelines, Defense Fees / Costs, Fee Agreement, Fee Data / Fee Analytics, Fee Scholarship, Legal Bills / Legal Costs, Legal Spend, Litigation Management, Study / Report

A recent Law 360 story, “Biggest Cos. Foresee Legal Cuts in 2015,” reports that two-fifths of legal departments at companies with revenue exceeding $10 billion said they expect their legal spend to decrease in 2015 due in part to an increased focus on minimizing fees paid to outside counsel, a survey by consultants for The General Counsel Forum revealed.

The survey of 75 companies--conducted by Huron Consulting Group—showed that while a percentage of all law departments foresaw a drop in legal spending, those bringing in the most revenue were more likely to see a shift toward tighter budgets in the upcoming year.  The predicted decrease are due largely to carefully crafted cost-management programs implemented by internal legal departments focused primarily on fees paid to outside counsel, Huron’s report on the survey results said.

Cost management programs implemented by law departments are becoming more sophisticated as financial pressure heightens, according to the report, leading to the reduction in expenditure.  One change made by more than half of those surveyed is the use of market data and analytics when decisions about outside counsel fees, the report said.

The survey also found that the use of alternative fee arrangements with outside counsel is on the rise.  More than 80 percent of law departments reported using alternative arrangements in 2014, and nearly half of law departments said alternative fee arrangements made up at least 10 percent of their total outside counsel expenses for the year.  Another strategy law departments reported using to cut costs is harnessing technology in their budget management efforts.