Legal Commentary

Survey Of GCs--More Alternative Fees Coming?

By Patrick J. Lamb

Nearly 75% of all law departments are facing budget cuts in 2009.  Over 30% are facing cuts of between 11% and 20%, while 35% are facing cuts between 6% and 10%.  These are among the bleak results from an Altman Weil flash survey of General Counsel.

So, how do the respondents plan to deal with these cuts?  Over 50% plan to use more alternative fee agreements and 53% plan to use lower priced counsel for some work.

The punchline of the survey is this:  the top three concerns of general counsel are (1) outside counsel costs; (2) lack of predictability of legal spending; and (3) litigation risk.

One last result of note.  Over 82% of the respondents currently spend less than 10% of outside counsel fees on alternative fee arrangements.  This excludes discounted hourly rates and blended rates (which are not, in any real sense, alternatives to hourly billing).

So let's do some analysis.  Fifty percent plan to use more alternative fees.  Eighty two percent are spending less than 10% on AFAs now.  GCs want lower costs and predictability.  Hmmmm.  There seems to be an answer here.  But will change win out over inertia?

Full post as published by In Search of Perfect Client Service on January 19, 2009 (boomark / email).