As Big Law firms finish out a year that saw healthy revenue and demand growth, many of their in-house counterparts have said they’ve already begun to cut back on their total law department spending in anticipation of an economic recession.
The reports released in the last week by Citi Private Bank’s Global Law Firm Group and Altman Weil highlight what appears to be an enthusiasm gap between these two interdependent corners of the legal industry.
Citi announced this week that revenue grew by an average 5.1% in the first nine months of the year for the 190 law firms the bank surveyed. By contrast, 238 chief legal officers told Altman Weil that only a plurality of them—40%—increased their law department budgets this year.
That’s still a lot, but it’s a decrease from last year’s 53%, said James Wilber, an Altman Weil principal and the survey author. And in this year’s survey, 27% of departments said they spent more on outside counsel this year—a drop from last year’s 42%.
Law firms have been building up the practices that thrive in a bad economy, including bankruptcy practices and litigation, Rusanow said. The American Lawyer in October found that 2019 has seen more lateral moves among bankruptcy-focused lawyers than in 2017 and 2018 combined. Jon Lindsey, the New York founding partner of Major, Lindsey & Africa, said every law firm the legal recruiter has visited prioritized growing its bankruptcy practice.