General counsel are continuing to shrink their law firm panels as they bring more work in-house, according to new research on global multinational companies.
BTI Consulting Group’s 15th Annual Survey of General Counsel shows that companies have cut as many as 18 law firms from their stable of providers over the past two years.
BTI president Michael Rynowecer told the Gazette the task of managing law firms ‘is an unwieldy, and labour- and time-intensive process’.
External spending has reached pre-recession highs, but GCs are using outside counsel more sparingly. Less than 60% of total legal spend now goes to external counsel.
External legal spending has experienced a 1.1% compound annual growth rate since 2011 – seven times slower than growth in internal spending.
After three years of steady increases, internal legal spend levels reached a 14-year high, with companies spending an average of $14.6m in 2014.
Litigation remains the biggest focus of practice area spend – accounting for 36.1% of the budget in 2014 compared with 38.6% in 2013.
The report states that getting the upper hand in managing litigation has been a long-term goal for GCs.
Three tactics have had the biggest impact on helping to resolve and better manage litigation: formal early case assessment strategies helping to prioritise which cases to settle and which to pursue; automating and streamlining routine matters; and embracing technology and legal process outsourcing for resource-heavy tasks.
Meanwhile, in-house legal departments are growing. The report shows a 27% increase in the size of corporate legal departments over the past three years.
Rynowecer told the Gazette there are now ‘some of the best opportunities for in-house lawyers that there have been for 30 years.
‘Some managing partners of law firms are leaving to become global corporate counsel.’