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More in-house lawyers are exercising power over law firms

New ACC survey shows power shift from firms to corporate legal departments

According to the Association of Corporate Counsel (ACC), in-house legal teams are toughening up.

The association released a survey yesterday revealing that corporate law departments are increasingly calling the shots in their relationships with outside law firms and clients. The 4,161 in-house lawyers who participated in the survey reported that they are cutting outside counsel spend by taking on more work in-house, demanding discounts and alternative fee arrangements from their law firms, and boosting their hiring, sometimes hiring fresh law school graduates.

The survey also found that since 2006, in-house budgets have increased by more than 20 percent, and external spending on litigation has decreased, meaning many law firms are struggling to retain work.

“Top in-house counsel have proved their value, both in their traditional roles as legal advisors, and in the oversight of outside counsel expenditures,” James A. Merklinger, ACC Vice President and GC said in a press release. “Now, more than ever, they are taking steps to proactively reduce their companies’ outside counsel spend.”

Following are some key findings from the ACC survey:

  • 37% of GCs planned to hire more staff in 2011
  • 65% of in-house departments use outside firms for litigation, compared with 69% in 2006
  • 20% of in-house departments use outside firms for tax issues, compared with 30% in 2006
  • 28% of in-house departments use outside firms for M&As, compared with 35% in 2006
  • 22% of in-house lawyers earned more than $300,000 in 2011

Ashley Post

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