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Corporate law departments spending more freely than a year ago


Corporate law departments are spending a little more freely than a year ago, according to the 2011 Chief Legal Officer Survey conducted by legal consulting firm Altman Weil Inc.

The survey found that 56% of chief legal officers surveyed in October 2011 indicated they had increased their law department budgets in 2011 from 2010, compared with 51% who did so in 2010 from 2009. The median amount of the increase also rose, to 7% this year from 6% a year ago. Meanwhile, 46% of law departments increased their outside expenditures, compared with 43% last year, according to the survey.

“These are not big changes,” said Altman Weil principal Daniel J. DiLucchio in a statement. “It is the shift of direction that's interesting as it may signal some softening of the hard line on spending that corporate law departments embraced in the last few years.”

Law departments and law firms are working more closely together on the issue of costs, the survey found.

For instance, 56% of departments reported they work collaboratively with law firms on value-based billing arrangements. In addition, among departments that have law firm panels, “a majority (58%) report that they encourage the panel firms to collaborate to improve process efficiency, rather than encouraging competition to drive down costs,” the survey found.

The use of non-hourly billing continues to edge up.

“In 2011, 84% of law departments report using some non-hourly fee arrangements, compared to 81% in 2010,” the survey found.

Most law departments “are missing an opportunity to use direct feedback to encourage change in their law firms,” Altman Weil found. “Only 35% of law departments regularly and formally evaluate outside counsel, according the survey, and a meager 17% communicate the results of those evaluations to their law firms.”

This story was first published by Crain’s Cleveland Business, a sister publication of Business Insurance.