Data on hiring few new firms and firing even fewer incumbent firms

To a survey on Legal OnRamp, a professional networking site for lawyers, 84 lawyers responded who work at companies that have revenues of at least one billion dollars. The American Lawyer’s Aric Press put the survey in context.

Sixty-three of these respondents estimated the number of law firms their departments had retained for the first time in 2008. The median was three firms while the average was 4.5 firms. In other words, these huge companies turned to new firms only occasionally. The survey did not ask how much the newcomers were paid, so some of them may have been hired to give small amounts of specialty advice or to serve as local counsel in a minor lawsuit. The small number of newcomers belies notions that the age has arrived of no loyalty and ruthless transactional retentions.

Nor did these law departments dismiss many firms They turfed on average 1.8 law firms, while the median was a mere one firm. Among companies of the size of this group, in a given year they probably retain 50+ law firms. Hence, dismissals are few and far between. Further, it could well be that some “dismissals” were actually following a favorite partner to his or her new firm (See my post of Feb. 19, 2007: fire law firms with 8 references and the PDF of my article that douses firing firms.).

Combined, these two findings suggest that large law departments are cautious about both hiring new firms and firing old firms. Loyalty to incumbents reins.

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