Slimmer Books of Business?

In each of the past nine years, legal budgets at U.S. corporations have increased by an average of 7 percent. But in 2009 law department spending dropped for the first time in nearly a decade, by 1 percent. Most cuts were on outside counsel, according to a survey of 252 U.S. companies in 22 industries by law firm consultants Hildebrandt Baker Robbins.

But the pendulum continues to swing. A survey of 275 corporate counsel conducted in the spring and summer of 2010 by Fulbright & Jaworski, an international law firm, noted that 21 percent of respondents had expanded their outside counsel roster in the past year. Twenty-five percent expect to see growth there by the summer of 2011.

Companies also are planning to augment their own legal departments, with 11 percent reporting that they foresee hiring more in-house attorneys in the next twelve months. The Hildebrandt study drew even stronger conclusions, with 41 percent of respondents anticipating a jump in law-department hiring.

So when do corporations turn to outside firms? The top reasons, says the Fulbright & Jaworski survey, were to tap into a law firm's specific areas of expertise; to expand jurisdiction; and to help handle a heavier litigation load.

For more on corporate counsel's current budget and hiring strategies, see "What GCs Really Want."

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