BTI Consulting published some figures and conclusions in Law Practice (Oct. 2004, pg. 13) that stuck in my craw. “In 2004, overall client spending on legal affairs dipped almost 7 percent [from 2003]. Despite these cuts, spending on outside counsel continues to rise, climbing 4.4 percent in 2004. Shrinking legal departments are a key driver both in the decline in overall spending and the push of more dollars to outside counsel. ‘Corporate legal departments have declined by 40 percent since 2001’ explains [a BTI analyst].” (emphasis added)
Setting aside my methodological questions about the solidity and representativeness of the survey respondents, I am deeply perplexed to read that overall legal spending declined (by 7%) and that law departments had shrunk almost in half.
Nothing I have encountered lends support to either finding. To the contrary, from my consulting experience, legal spending has steadily risen and law departments have remained stable or grown a bit.