Chief Legal Officers Face Increasingly Demanding Environment, New Survey Reports
(Newtown Square, PA, December 7, 2004) – The 2004 Chief Legal Officer Survey, conducted annually by the Association of Corporate Counsel (ACC) and Altman Weil, Inc., has just been released. The Survey reports Chief Legal Officers focused on performance and effectiveness in an increasingly demanding corporate environment.
The fifth annual Chief Legal Officer Survey canvassed Chief Legal Officers (CLOs) in attendance at ACC’s Annual Meeting in Chicago. Survey data is based on 167 responses received in October 2004.
Critical Concerns for CLOs
When asked about the most important management issue they face, CLOs named law department performance (efficiency, focus, prioritization) and cost control and reduction as their top concerns. Staffing the department adequately, and retaining and motivating talented lawyers under budgetary constraints were also seen as critical.
The most important client relationship issue Chief Legal Officers identified is compliance / Sarbanes Oxley, including implementation, execution, training and records management in the new regulatory environment. The second most frequently listed concern was demonstrating the value of the law department and its contribution to the goals of the organization.
“Chief Legal Officers are dealing with greater accountability for their department’s spending and performance as it relates to the corporate bottom line,” notes Altman Weil principal Dan DiLucchio. “This presents many challenges for professionals who must ensure superior legal services delivered in a cost effective manner.”
ACC president Frederick Krebs adds that “while CLOs face the seemingly difficult task of controlling costs in the face of expanding compliance needs, our members report that an investment in effective compliance programs can result in better bottom line results, when the legal department operates efficiently.”
Staffing Levels
The Survey reports that overall in-house hiring should increase in the coming year. 37% of Chief Legal Officers anticipate hiring new in-house lawyers in the next 12 months, up 7% from 2003. Overall use of outside counsel will be stable, with 20% of CLOs planning an increase, 20% a decrease, and 57% predicting their outside counsel use to remain the same.
Off-Shoring, An Emerging Issue
The Survey explored the emerging issue of outsourcing legal services and back office operations to off-shore locations like India and the Philippines. Only 2% of respondents are currently off-shoring any work, although 8% indicated they would pursue such an initiative within the next 12 to 18 months.
Inside / Outside Relationship
59% of Chief Legal Officers surveyed indicated they have fired or were considering firing at least one of their outside law firms in 2004, unchanged from last year’s survey and above the 50% mark for the fifth year in a row. The number one reason given for terminating a law firm was ‘lack of responsiveness’ followed by ‘cost management (fees and/or expenses)’ and ‘quality of legal work.’
When asked about the most innovative practice proposed or instituted by outside counsel this year, 75% of CLOs were unable to name even one innovation. For the 25% who responded, fee arrangements - including success fees, contingency arrangements, fixed fees and capped fees - were mentioned most often. Other answers included case management, technology, staffing and relationship management innovations.
About the Association of Corporate Counsel, Altman Weil
The Association of Corporate Counsel, formerly the American Corporate Counsel Association, is the in-house bar associationSM serving the professional needs of attorneys who practice in the legal departments of corporations and other private sector organizations worldwide. Since its founding in 1982, the association has grown to more than 17,000 members in 51 countries who represent 7,500 private sector organizations.
Founded in 1970, Altman Weil, Inc. provides management consulting services to law firms, corporate and government law departments and legal vendors throughout North America, Latin America, the U.K. and Europe. Altman Weil is also known for the many legal economic and management surveys it conducts and publishes, including the Law Department Compensation Benchmarking Survey and the Law Department Management Benchmarks Survey, both published in association with ACC.
Complete results of the 2004 Chief Legal Officer Survey are available online at www.acca.com/Surveys/CLO2004.pdf and www.altmanweil.com/news/acca.cfm. For more information about the Association of Corporate Counsel go to www.acca.com. For more information about Altman Weil, Inc. visit www.altmanweil.com.
Contact:
Daniel J. DiLucchio
Altman Weil, Inc.
610.886.2000
djdilucchio@altmanweil.com
Ron Peppe
Association of Corporate Counsel
202.293.4103, x 329
peppe@acca.com
