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Belts tightening at corporate law departments as budgets contract

Corporate legal departments are cutting back on internal hiring and outside expenses such as spending on law firms, according to Altman Weil’s 2019 Chief Legal Officer Survey.

“The changes are moderate, but we see a contraction across all key indicators,” James Wilber, an Altman Weil principal and the annual survey’s author, said in a prepared statement.

Altman Weil, which consults to law firms across the country and is based in Willow Grove in eastern Pennsylvania, has conducted the national survey since 2000. It drew responses from one-fourth of a field of 977 corporate law departments. Pittsburgh specific data was not available.

What may be driving the frugality is concerns about the economy. More than three-fourths of respondents expect a recession within the next two years.

“We believe chief legal officers and their teams will be well equipped for a downturn if or when it comes,” Wilber said.

But Wilber said law departments have made changes since the last recession, enabling them to operate more efficiently, basically becoming “more sophisticated consumers of legal services.” That includes adding operational management specialists, investments in new technology and restructuring in-house resources.

“People are hiring lawyers a lot more than they’re hiring firms,” said Lori Carpenter, president of recruitment firm Carpenter Legal Search, said. “It’s very relationship-driven without a doubt.”

Hiring by corporate legal departments has remained steady, she noted.

“What we’re starting to see is more senior level GCs (general counsels) getting ready to retire and so there’s a shifting of responsibilities,” Carpenter said.

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