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Two-Thirds of U.S. In-House Law Departments under Pressure to Cut Spending Amid Economic Downturn, According to LexisNexis® Survey

Nearly six in 10 in-house law department executives asking their law firms for alternative billing arrangements

June 29, 2009 — New York, NY, June 29, 2009 - Nearly every in-house law department in the U.S. has been affected by the current economic downturn and has adjusted their practices to reduce costs, according to a recent LexisNexis CounselLink™ survey conducted by Corporate Counsel magazine. LexisNexis is a leading global provider of content-enabled workflow solutions.

The survey found that 98 percent of in-house law department executives agreed that the current economic environment has affected their departments, a number much higher than the 78 percent of respondents who reported an economic impact on their companies in the U.S. overall. In addition, more than 67 percent of respondents said they feel pressured to cut spending and 59 percent have already experienced a reduction in their department budget. Overall, an overwhelming 97 percent are adjusting their current practices to reduce costs.

The survey, conducted in February 2009 by Corporate Counsel, an Incisive Media publication, queried 191 in-house legal managers based in the U.S. and interviewed a representative sampling of them by phone in order to develop a sharp picture of how they are dealing with the economic downturn.

"At one time, in-house law departments were more insulated from the effects of such economic cycles as the role of responding to law suits and the importance of managing critical legal issues gave their budgets a certain degree of plasticity," said Marcus Linden, vice president of Corporate Counsel Solutions for LexisNexis. "The results of our survey illustrate that era has passed, as in-house counsel say they are pressed to stay within budget, cut or maintain headcount and even to show a return on investment at times. The task is particularly daunting because regulatory compliance and litigation workloads are increasing while budgetary resources are shrinking. In short, the modern mantra of 'do more with less' has hit law departments hard in this downturn."

Other interesting findings from the survey of in-house counsel include:

  • 60 percent are facing pressure for more cost accountability for outside counsel
  • 56 percent have already been forced to reduce spending on outside counsel
  • 68 percent are bringing some legal work back in-house
  • 37 percent have experienced staff reductions in their in-house law department
  • 57 percent are asking law firms for alternative billing arrangements
  • 49 percent are requiring their law firms to renegotiate rates
  • 39 percent are conducting detailed reviews of law firm paper invoices, 23 percent are conducting detailed reviews of electronic invoices, and 17 percent are requiring outside firms to use e-billing

 

"It's particularly illuminating that nearly six in 10 in-house law department executives are now asking their law firms for alternative billing arrangements, something that has been quietly discussed for years, but now appears to be taking hold," said Linden. "With its robust e-billing platform, our LexisNexis CounselLink product supports this growing market demand to help customers shorten matter lifecycles, reduce legal fees and improve financial outcomes."

A free copy of the report on the survey, "Effects of the Current Economic Downturn on U.S. Law Departments," is available by registering at http://www.lexisnexis.com/study. The report provides an overview of the strategies, systems and management tools that law departments for U.S. organizations are using to cope with current economic challenges. It also examines the impact of the economic downturn on these same domestic organizations and their law departments.

About LexisNexis
LexisNexis® (www.lexisnexis.com) is a leading global provider of content-enabled workflow solutions to a wide range of professionals in the legal, risk management, corporate, government, law enforcement, accounting and academic markets. LexisNexis originally pioneered online information with its Lexis® and Nexis® services. A member of Reed Elsevier [NYSE: ENL; NYSE: RUK] (www.reedelsevier.com), LexisNexis serves customers in more than 100 countries with 18,000 employees worldwide.

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