The Survey Says...

Preliminary results from our legal spending survey shows general counsel balancing an increased need for outside counsel with pressure to reduce costs.

A stagnant economy has put pressure on departments to decrease spending, while the public's sudden interest in corporate governance has kept demand for legal services high. In August, The Corporate Counselor and The Center for Marketing Effectiveness conducted their annual survey, Benchmarking Study for Legal Services, on legal spending and the uses of outside counsel to provide insight on the factors that influence the selection and retention of outside counsel.

Preliminary results show that legal spending on outside counsel increased from 2002 to 2003; with 44% of Fortune 500 companies, and 52% of Fortune 1000 companies reporting substantial increases. Yet over 90% of respondents indicate high to moderate pressure to reduce costs. Respondents attribute the dichotomy to changes in regulation, with 89% citing it as having a high to moderate impact on their company's spending on outside counsel.

Full results will be supplied as a special supplement to the October issue of The Corporate Counselor. For now, here are some highlights:

• General Trends. Legal departments spent more on outside counsel in 2003 than in 2002, with the trend expected to continue in 2004.
• Industry Spending. Companies operating in the health care and insurance industries witnessed the biggest increases in outside counsel spending. Spending decreased in the automotive and telecommunications sectors.
• Spending by Practice. Demand for outside counsel is driven largely by regulation and corporate governance matters. Spending on outside counsel for intellectual property and patent law has decreased.
• Retention Factors. Quality of work and results drive outside counsel retention – even more than value and cost.
• Selection Factors. When selecting outside counsel, general counsel place little or no importance on firm branding. General counsel report that they utilize less commercial channels when selecting outside counsel, such as referrals or personal contacts rather than consulting existing firm Web sites.

Preliminary results from our legal spending survey shows general counsel balancing an increased need for outside counsel with pressure to reduce costs.

A stagnant economy has put pressure on departments to decrease spending, while the public's sudden interest in corporate governance has kept demand for legal services high. In August, The Corporate Counselor and The Center for Marketing Effectiveness conducted their annual survey, Benchmarking Study for Legal Services, on legal spending and the uses of outside counsel to provide insight on the factors that influence the selection and retention of outside counsel.

Preliminary results show that legal spending on outside counsel increased from 2002 to 2003; with 44% of Fortune 500 companies, and 52% of Fortune 1000 companies reporting substantial increases. Yet over 90% of respondents indicate high to moderate pressure to reduce costs. Respondents attribute the dichotomy to changes in regulation, with 89% citing it as having a high to moderate impact on their company's spending on outside counsel.

Full results will be supplied as a special supplement to the October issue of The Corporate Counselor. For now, here are some highlights:

• General Trends. Legal departments spent more on outside counsel in 2003 than in 2002, with the trend expected to continue in 2004.
• Industry Spending. Companies operating in the health care and insurance industries witnessed the biggest increases in outside counsel spending. Spending decreased in the automotive and telecommunications sectors.
• Spending by Practice. Demand for outside counsel is driven largely by regulation and corporate governance matters. Spending on outside counsel for intellectual property and patent law has decreased.
• Retention Factors. Quality of work and results drive outside counsel retention – even more than value and cost.
• Selection Factors. When selecting outside counsel, general counsel place little or no importance on firm branding. General counsel report that they utilize less commercial channels when selecting outside counsel, such as referrals or personal contacts rather than consulting existing firm Web sites.