Large and small clients will spend more on outside counsel in 2021. Look for a net increase of 5.8% over 2020. Some industries will be increasing legal spending far more than others. And the spending spree may last longer than you think. Let’s start with the industries increasing the most:
It’s All in the Industries
A mere 18 to 20 industries account for the bulk of spending on law firms in the private sector. Out of more than 600 SIC codes, only a few spend so much they dwarf all others. This disproportional spending lies at the heart of the business market for outside counsel. The bulk of these industries are either benefiting or are avoiding a slowdown.
Industries benefitting from the pandemic include:
- Health Care
- Social Media
Industries avoiding serious damage or are on the road to economic recovery include:
- Food and agriculture
- Consumer products
- Financial services
- Private Equity
These 2 sets of industries account for more than half of the largest legal spending industries out there.
Broad Industry Needs Add Fuel to the Spending
The EEOC issued guidelines impacting almost every company with a legal budget. Top legal decision makers need help — especially clients with multiple locations. Clients want help developing a strategy and understanding how these rules impact their company specifically.
Client spending on data privacy/cybersecurity was soaring before the pandemic. Now client spending is turbocharged. The sudden and unplanned move to a remote workforce redefines your client’s urgency. And, clients say they can’t find enough qualified attorneys — demand is way ahead of perceived supply.
FinTech is a unique, high-growth market with strong and diverse legal needs. The largest banks in the US and the world are investing in Fintech — both in and outside of the bank. These clients are hiring law firms from the tech world and the regulatory world to help them. There is no slowdown in spending here.
Health Tech resembles FinTech — large institutions are investing in Health Tech and looking to a new set of law firms to help. The pandemic has only served to increase spending and the need.
Even Industries Increasing Spending will Be Pummeling Rates in Selected Practices
Every industry has its own set of needs. Every client in these industries has their own priorities. They are paying premiums in some areas while pummeling rates in others. Your business success demands you navigate these spending patterns and priorities.
The firms using client feedback to target these priorities have an edge. They know where the spending is, new client priorities, and the subtleties of the industries. In full disclosure — BTI is currently performing a tremendous amount of this telephone-based client feedback research, so we are biased. But we see how it benefits our clients.
You can also use BTI reports to spot the premium opportunities — by industry. Spot the practices under price pressure, and see where overall outside counsel spending is heading up.
BTI Practice Outlook 2021: Pandemic-Led Legal Spending:
Pinpoint legal spending patterns in 14 practices and 18 industries in our brand-new report. Discover where rates are high and where they are low. Learn more.
BTI Litigation Outlook 2021: The Pandemic-Led Market:
You can see exactly where and how clients are spending their litigation dollars in 2021 for 8 segments and 18 industries. And, learn which firms clients say are best positioned to get this work — by name and practice. Learn more.
BTI Cybersecurity & Data Privacy 2020 Outlook:
Defines the fastest-growing segment of the legal market. Discover client’s hiring criteria, spending patterns for 17 industries, and the law firms best positioned to get the coveted work. Learn more.
Be safe. Be well. Be cautious.
The MAD Clientist