Survey analyzes a decade of trends in managing outside counsel

October 29, 2010

wood block bar graph (art)Controlling spending on outside counsel remains the top priority for in-house counsel, topping compliance and other concerns, according to the 10th annual 2010 ACC/Serengeti Managing Outside Counsel Survey Report, a collaboration between the Association of Corporate Counsel (ACC) and Serengeti Law. The survey results were released earlier this week at the ACC’s 2010 Annual Meeting in San Antonio.

This year’s report discusses a decade’s worth of data on the evolving relationships between company law departments and the law firms who represent them. Some of the key trends of the past 10 years:

  • More work retained in house. There has been a noticeable shift of work from outside to in-house counsel as corporate law department budgets have stopped growing.
  • A renewed focus on spending. Although compliance is still a key focus, controlling outside legal spending has returned to the top spot during the past two years, similar to the start of the decade.
  • Record-low rate increases. Due to the weak economy and a greater willingness of in-house counsel to assert their bargaining power, we are witnessing the smallest increase in hourly rates in the past 10 years – and in-house counsel anticipate similar record-low increases for the coming year.
  • New demands on outside counsel. The need to drive efficiency has also led to a notable rise in policies requiring project budgets, client consent for firm staffing, early case assessments, the use of alternative dispute resolution, client ownership of work product, and technology requirements.

The report also discusses trends for the past year. What’s “in” right now:

  • Cost control. Overall law department spending remained flat, with a 0% median increase in the past year.
  • Project management. To help control costs, in-house counsel are now requiring project management techniques and systems to obtain better value from outside firms, even as a condition for hiring and retaining them.
  • Seasoned attorneys. The survey found that 63% of corporate law departments require their outside counsel associates to have a minimum of 5 years experience to work on their projects.
  • Alternative fee structures. While the billable hour is still the standard method used by firms, alternative fee arrangements based on value-driven results are on the rise.

More information about the survey is available on the Serengeti website.