Survey suggests outside counsel spending is crowding out inside budgets?

In October the consulting firm Altman Weil collected responses from 176 “top corporate lawyers.” The majority represented corporations with revenues between $1 billion and $2 billion, while 20 percent had revenues above $10 billion.

For this sample in 2011, the median increase in internal legal budgets was three percent, which was probably largely accounted for by increases in salaries. Triple that increase was outside expenditures: the median outside budget rose a whopping 10 percent. Since outside spend typically exceeds inside spend – 60/40 is quite typical as a ratio – the median total legal budgets must have risen by something like seven percent. Assuming corporate revenue rose over the same period, law department spending surely kept pace with the faster tempo of business. But the shift of that spending to outside counsel was marked.

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