Proclaimed drop in legal spend: good management or bad economy?

The press release by Thomson’s Hildebrandt BakerRobbins, regarding the first benchmark survey by the merged consulting groups, makes much of the year-over-year decline in median total legal spending. The consulting firm touted management prowess on the part of law departments as the cause of the drop from 2008 to 2009.

Perhaps, but my explanation, quoted extensively in an article by Corporate Counsel, proposed a much more prosaic explanation: business fell off sharply during 2009 and legal expenses dropped proportionately. Far fewer purchases and sales, not nearly as many big acquisitions and divestitures, very little activity in the equity or bond markets, less expansion and growth: when business declines, so does legal spending.

To borrow a phrase from political lore, it’s the economy, stupid.