By Erin Geiger Smith
Nov 5 (Reuters) - The number one way in-house legal
departments are bringing down costs is negotiating price
reduction with outside counsel, according to a new survey.
Over the last 12 months, 71 percent of companies negotiated
price reductions with their law firms, and 41 percent shifted
work to firms that charged less, according to a survey of 200
chief legal officers conducted by law firm consultancy Altman
For the first time in three years, more in-house departments
decreased their spending on law firms than increased it.
"Chief Legal Officers are not waiting for law firms to
change their business models," Altman Weil's Daniel DiLucchio
said, and are instead taking the initiative to create savings on
A significant number of departments reported spending less
on outside counsel budgets. Thirty-nine percent of chief legal
officers said they decreased their outside counsel budget
between 2011 to 2012, compared to 25 percent of companies that
reported cutting costs that way between 2010 to 2011.
The most important factors influencing how in-house groups
choose their law firms, however, were not financial. Instead,
chief legal officers pointed to elements such as how well firms
understand a company's business and industry, as well as
referrals from colleagues.
One topic that is important for law firms but appears less
central to in-house teams is succession planning. Almost twenty
percent of companies surveyed said they have talked to their
outside counsel about succession plans for key partners, but 40
percent said they haven't thought about it and 32 percent said
succession planning "is not an issue."
The chief legal officers responding to the survey run legal
departments of various sizes -- 46 percent are in a department
of between two and 15 attorneys, while thirteen percent oversee
more than 100 attorneys. Half of all departments had at least
one attorney that resides outside the U.S.
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