Look hard and you will see a faint light at the end of the tunnel. We don’t think it’s a freight train.
Clients are making big time shifts to their spending. Large pockets of dollars are moving to areas where spending increases haven’t been seen in years. And these moves are creating new—and lucrative—opportunities for the law firms able to spot these shifts.
The typical large company was spending $19.6 million on outside counsel in 2015. While the total 2016 outside counsel spending will not change—how it is spent will—creating more opportunity than the market has offered in the last 5 years. Large companies are facing more high-risk work and exposure since the great recession. Somewhere between 18% and 30% of the total budget is moving to this new work. The larger the company, the larger the shift. This translates into between $3 million and $6 million in new business up for grabs—per client.
Many of these new dollars are in highly profitable work: complex and bet-the-company litigation, global M&A, middle market M&A, class actions, and mass torts to name a few. The best targets for law firms are companies in the highest-spending industry segments: Financial Services, Big Pharma, Telecom, and Healthcare. The biggest legal spenders are spending bigger in 2016.
The good news: these dollars aren’t earmarked for specific firms—yet. Clients are shaking up their roster of primary firms, especially as they experience law firm client service dropping like a rock.
Corporate counsel report client service from their law firms is down substantially. There is a 2/3 chance the law firms currently performing the work do not have a lock on the new business. This is your chance to move in.
You can view our annual BTI Market Outlook and Client Service Review Webinar, which covered this topic and much more here.