Corporate Legal Spending Expected to Rebound Sharply
Following a significant decline in corporate expenditures on legal services in 2008 and the first half of 2009, businesses will once again begin increasing their law budgets in the second half of this year according to the results of a study announced today by legal industry research leader BTI Consulting.
The study, titled ‘BTI Mid-Year Spending Update and Outlook,’ covers 16 practices and 18 industries and is based on 370 interviews with corporate counsel at Fortune 1000 companies that average $19.4 million in outside counsel spending. Key findings of the study include:
- Clear signs of renewed legal spending after a sharp decline of 7% since year-end 2008.
- Corporate legal spending at large companies will grow nearly 5% over the next 6 months, bringing overall market growth to only negative 1.4 percent for the year.
- Leading the growth in spending will be the practice areas of regulatory compliance, employment, securities and bankruptcy/corporate restructuring law.
- Year-to-date, the hardest hit core practice areas have been corporate, securities and finance, and intellectual property.
“We have all read the headlines detailing drops in business spending across every category, including legal services. This study presents a big ray of sunshine in what has been a very stormy environment. The reversal of this negative spending trend will help buoy flailing legal markets and offers some hopeful news about business spending in general,” explains Michael B. Rynowecer, President of The BTI Consulting Group.
Rynowecer suggests the increase in spending will not, however, alleviate law firm lay-offs which have been rampant in recent months. “Rather than a wholesale recovery, we are seeing a shift of resources to specific firms and practices that are well-positioned,” Rynowecer warns. “Large companies are sharing this renewed spending with a smaller group of law firms than just 6 months ago. Those firms caught unaware or unprepared for this shift will continue to face significant challenges and not reap the benefits of this increased spending.”