Legal

Bad News for Big Law Firms: Corporate Clients Do More Work In-House


Big Law—the business of providing legal services via independent professional partnerships—is going through a rocky period. Consolidation and culture change are the themes of the day. The inability of famous brand names, such as Patton Boggs, to survive on their own, not to mention the implosion of august partnerships such as Dewey & LeBoeuf and Howrey, speak to tumultuous times.

Now more sobering news for Big Law. Consero Group, a corporate conference organizer, reports that in-house general counsel are expanding budgets and pulling work back to their own dedicated staffs rather than farming it out to firms.

A new survey of general counsel shows that 84 percent said they’re not delegating more of their company’s work to outside counsel than they did 12 months ago, Consero said. In addition, 58 percent are seeking to tighten expenditures by demanding that outside counsel offer alternative fee arrangements rather than the traditional hourly rates.

At the same time, Consero reports that general counsel are bolstering their internal operations. Consero based its findings on surveys sent to general counsel of Fortune 1000 companies; 57 of those in-house attorneys responded.

Fifty-one percent noted an increase in their legal department’s budget over the past year, while 44 percent said they’d expanded their staffs. “These increases are a positive sign that the level of resources available to legal departments is on the rise, providing General Counsel with the budgetary and staff resources they need in order to navigate the increasingly complex legal risks and liabilities of the business,” Paul Mandell, Consero’s chief executive, said via e-mail.

A positive sign, perhaps, for the heft and prominence of corporate legal departments. Not so positive for the law firms scrapping for fees from those corporate departments.

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

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