New research has raised questions about the capacity of specialist firms that do not have diversified offerings to keep their places as suppliers. Wolters Kluwer’s ELM Solutions recently published i
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Firms see clients pause relationships in biggest market shakeup since financial crisis, study finds
01 April 2021
Wolters Kluwer report shows AmLaw 150-200 firms most impacted as in-house teams pare legal spend
rikur B; Shutterstock The legal services market experienced its biggest shakeup in a decade last year as a majority of in-house teams reduced their reliance on external legal providers, with smaller firms suffering the greatest impact, according to a new report from Wolters Kluwer ELM Solutions. The first of its four quarterly reports – LegalVIEW Insights – found that 90% of corporate legal departments downsized their active provider relationships, with 16% of relationships that existed in 2019 paused last year due to the economic impact of the pandemic. Firms ranked between 150 and 200 in AmLaw’s annual US law firm ranking were most impacted by the cutbacks, followed by firms outside the top 200.
Workload is up for 76.7 percent of corporate legal departments, according to Altman Weil’s
But that won’t necessarily correspond with additional work for law firms.
Indeed, despite an increase in work, from 2019 to 2020, 70.2 percent of legal departments did not increase their law firm spending; 38.4 percent decreased it. Nearly 13 percent of those who trimmed their outside counsel budgets did so by more than 10 percent.
Specifically, when asked how they planned to cover their overall workload, 54.8 percent of legal departments – more than half – said they would shift work to their in-house workforce.
The budget trends support this: 40.4 percent of legal departments increased their internal budgets, while 36 percent report plans to hire more in-house lawyers and 10.6 percent plan to hire contract lawyers.