Law Firms Losing Clients, Money While In-House Counsel Thrives
It's a sign of the economic times: More companies are handing legal tasks to their in-house counsel, and outside law firms are losing out.
A survey of companies with in-house legal teams showed a 6% uptick for in-house expenditures last year, compared with 1% growth in 2009.
Corporate spending on outside legal services declined by 3% in 2010, the ABA Journal reports.
Case in point: Minnesota-based Jones Lang LaSalle, a real-estate and investment-management giant.
Three-fourths of Jones Lang's legal work is now being handled by in-house counsel, while 25% is given to outside law firms, general counsel Mark J. Ohringer says.
The growing company has hired 60 new lawyers for their in-house team in recent years. Ohringer foresees even more in-house growth.
"If I could have 100% of the work not done by law firms, I would," Ohringer told lawyers at the Law Practice Management Futures Conference in Chicago last month.
The move to in-house counsel is mostly about saving money. Ohringer noted that an experienced in-house attorney costs his company about $125 an hour, a huge savings compared to what big law firms would charge for the same work.
And the competition's not just coming from in-house counsel. Foreign law firms and non-attorney legal vendors are also taking assignments that used to go to traditional law firms.
But not all experts agree that keeping legal work in-house saves money. Some firms cater to budget-conscious companies by providing outsourced "in-house" services for a flat fee.
Traditional law firms may want to take notes of this cost-cutting trend, and take steps to stay competitive with in-house counsel.