Attorneys loosen budget constraints

A sign the recession could be on the mend: Corporate law departments have begun to ease up on cost cutting, according to a survey from management consulting firm Altman Weil.

The survey found more law departments had increased budgets in 2011, and more increased expenditures on outside counsel. Overall, 56% of chief legal officers who responded to the survey reported a budget increase in 2011, up from 51% in 2010. And 46% of corporate law departments spent more on outside counsel in 2011, up from 43% last year. Finally, the median amount of increased budgets was also up, to 7% this year from 6% in 2010.

“These are not big changes,” Altman Weil principal Daniel DiLucchio says 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.”

Suburban Philadelphia-based Altman Weil, which focuses on the legal profession, has published its Chief Legal Officer Survey annually since 2000. The 2011 survey also found that law firms continue to seek alternative ways to charge clients, given the hourly-billing system has come under criticism from many cash-strapped small business owners.

Indeed, according to the survey, 84% of corporate law departments used some non-hourly fee arrangements in 2011, up from 81% in 2010. “Even if law departments are easing up a little on cost cutting,” says DiLucchio, “they are still going to explore less expensive alternatives as long as they are reliable and effective.”