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Many CLOs Are Cutting Outside Counsel Spend, Survey Finds

The 2016 Chief Legal Officer Survey shows that more than half of departments (58 percent%) negotiated fee discounts in the past year.

Legal departments are looking to save money wherever they can. That includes cutting outside counsel spending, which appears to be one of the biggest targets for cost elimination, according to a new survey.

The 2016 Chief Legal Officer Survey, released Tuesday by legal consulting firm Altman Weil Inc., shows that more than half of departments (58 percent) negotiated fee discounts in the past year. Another way that CLOs are trimming their budgets is by asking for alternative fee arrangements, which 48 percent of respondents said they had done in the past year. Meanwhile, 40 percent reduced the total amount of work sent to law firms and 36 percent shifted work to lower-priced firms.

"Chief legal officers are embracing the role of change agents, wielding their buying power, leveraging technology and process efficiency, and outsourcing to alternative providers, all to build a more effective and flexible legal function," said James Wilber, an Altman Weil principal and survey co-author, in a press release.

Unsurprisingly, the survey also showed a shift toward companies handling the additional legal work in-house. Eighty-one percent of legal departments that have plans to reduce outside counsel spend in the next year intend to bring some or all of that work in-house to be completed by their own lawyers. For others decreasing outside counsel spend, 43 percent will reassign the work to their nonattorneys who work in the department, while 42 percent indicated it's work they no longer need to do.

But not everyone is rushing to sign up their departments for extra work. More than half of legal departments (57 percent) are outsourcing work to nonlaw firm vendors, up from 43 percent in 2012. The types of work most likely to be outsourced are e-discovery and document review.

Originally published on Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Stephanie Forshee

Stephanie Forshee is a writer for Inside Counsel magazine. Previously, she has worked for the Puget Sound Business Journal, the San Fernando Valley Business Journal and Auto...

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