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Law Firms Look to Next Year for Higher Legal Spending
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legal spending

Summary: Legal spending was mostly flat this year with companies finding alternate ways to adjust for their legal needs, but many expect their needs to go up next year.

While HBR Consulting’s 2015 Law Department Survey shows that legal spending is up, that money isn’t going straight into the wallets of law firms. The survey looked at 308 companies in 22 industries compared to 292 companies last year.


The survey showed that total legal spending was up by 2 percent, but outside counsel spending went down compared to last year. The spending inside legal departments only increased 3 percent. The best news was for in-house spending. The increase in total compensation, such as cash bonus, base salary, and long-term incentives was up 3.5 percent.

As the leader of HBR’s Law Department Consulting practice, Kevin Clem, stated, “Departments are prioritizing internal operations, hiring internally, investing in new or upgraded technologies, and raising total compensation for their employees.” Consulting senior director and survey editor at HBR, Lauren Chung, went on to say, “There’s a continued push to manage the costs of outside counsel. Organizations are taking aggressive measures, like the consolidation of firms, use of analytics and use of alternate fee arrangements and detailed budgets, to control for these costs, which is having a direct impact on legal spending.”

When companies responded to the question about their predicted legal needs in the future, 76 percent said, “their legal needs would increase in the next year” with 19 percent answering that their legal needs would stay the same. The areas with the most growth are believed to be in regulatory work and mergers and acquisitions.

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