Despite many law departments’ efforts to slash the number of law firms they retain (See my post of April 22, 2007 on Tyco International and references cited.), powerful forces push the other way.
For example, the more global the operations of a company, the more law firms are likely to be needed in those foreign markets (See my post of April 9, 2006 about different trends in the US and outside the US.). Legal and regulatory schemes have become more complex, which means law departments need the counsel of more specialists (See my post of March 17, 2007 on complexity in litigation and references cited.). Convergence often results in larger, more costly law firms (See my post of April 2, 2006 on this and other disappointments of convergence.).
Additionally, competitive law firms jostle themselves more and aggressively to be instructed by law departments and departments give some of them a try. As law departments grow larger, there are more voices calling out for firms they like. Finally, e-billing enables a law department to hire a wider array of firms since the software reduces the administrative hassles of invoice review (See my post of March 6, 2007 on the market penetration of e-billing systems.).