High Revenue Companies Forecasting Reduction in 2015 Legal Fees

Posted on January 28th, 2015 by Legal Fee Advisors

A Law 360 article dated December 3, 2014 by Aebra Coe entitled Biggest Cos. Foresee Legal Cuts in 2015, reports that a significant number of legal in-house departments of companies with revenue in excess of $10 billion will be focused on reducing outside legal fees in 2015 as they begin to institute cost containment programs to minimize these fees.

A survey of 75 companies by Huron Consulting Group demonstrated that many in – house legal departments are tightening up their budgets and predicting drops in billings due to specifically designed cost management programs focused on external law firm billings.  A similar LexisNexus survey reports that half of the companies they surveyed plan on doing more work in-house to reach their goal of cutting expenses.

Not surprisingly, these 10 billion plus companies, faced with mounting pressure to reduce costs, are looking at market data and analytics to help in the attorney selection process.  Alternative fee arrangements was also mentioned as one of the strategies contributing to reduced legal fees.  The article points out that more than 80% of the law departments surveyed are using AFAs this year representing about 10% in total outside counsel expense.  The article also mentions long term technology solutions for these companies such as electronic billing as a means for controlling outside legal spend.   While AFAs and electronic billing are attractive solutions, the increased pressure felt by these companies to reduce costs will likely compel them to address increased legal costs that are incurred through hourly billing – as the hourly billing model currently represents approximately 90% of legal spend and there are no signs that hourly billing is going away anytime soon.

We at Legal Fee Advisors can help companies significantly reduce their outside legal spend incurred through hourly rate billings by creating clear and concise billing guidelines based on state and federal case law, statutes, ethical rules and industry standards and subsequently auditing those bills for compliance with the developed guidelines.  Companies that are looking for comprehensive solutions to their legal spend challenges should contact David Paige at Legal Fee Advisors at dpaige@legalfeeadvisors.com.

R. Rosenberg

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