Outside Counsel Spending Projected to Drop by 4.3 Percent Next Year

An article featured on Law.com states “A new study projects a 4.3 percent slide in corporate spending on outside counsel next year, on top of this year's 10.8 percent drop.” The study was performed by BTI and exposes the problem with high levels of over-capacity facing the domestic legal industry (and many other industries, as well) in the global economic downturn (hopefully, now the rekindling of a sustainable recovery).

Fortunately, economic indicators are starting to show a greater balance between supply and demand for legal services. As BTI President Michael Rynowecer said in the article, “The fact that we're seeing a couple of practices showing a pickup would suggest that we may be nearing equilibrium, at least for the moment.”

The study suggests “modest growth” in several legal sectors such as, “3.4 percent growth in regulatory work; 2.3 percent (growth) in litigation; and 1.4 percent (growth) in intellectual property litigation.”

These demand dynamics impact the overall legal outsourcing industry. If there is less work to go around, despite the cost saving functions of outsourcing/offshoring, outside vendors domestically and abroad are often those most affected in diminished demand. As the demand for legal services shifts toward equilibrium and beyond, we expect to s an increase is work for legal services vendors as well.

As noted previously on our blog, what is good for law firms is also good for legal outsourcing.