Ten years in the making—growth in outside counsel spending returns. Before we party like its 2007, it’s important to realize the 2018 increase is different. 2007 saw new money flooding the market. In 2018, clients are making a strategic choice to move money from in-house staff to outside law firms. These clients want more breadth of skills, the ability to tap skill sets as needed, and the ability to scale up quickly. These same clients want your smarts and experience. Of the many changes to expect in 2018, here are the 16 with the most impact:
- Outside counsel spending will grow substantially for the first time in 10 years.
- Clients are shifting $3B in spending to outside counsel from their internal budgets due to the steady increase in complex matters.
- 35% more companies expect to face IP litigation than in 2017.
- 20% of General Counsel are working on plans to proactively eliminate risk and accelerate regulatory approvals.
- Clients will continue winnowing down the number of law firms on their rosters.
- The largest legal spenders will increasingly rely on procurement to negotiate rates but GCs will retain hiring decisions.
- More high-profile big-market laterals will find new homes at new law firms.
- Middle-market M&A work (deals ranging in size from $200M to $1B) will continue to deliver a robust flow of business to law firms as large companies buy smaller companies to fill strategic gaps.
- Clients expect every law firm proposing on substantive work to offer budget and progress dashboards.
- Industry understanding will play a bigger role in convincing clients to hire your firm.
- Clients are beginning to avoid firms where they experience too much attrition.
- The largest clients who experience uneven client service will stop giving these firms new work.
- Healthcare companies will increase spending in 11 practice areas and will lead all industries in increasing outside counsel spending.
- Financial services companies are increasing spending on outside counsel more than most.
- Increased outside counsel spending at big pharma will rival financial services.
- Litigation will see the most growth of any area with more than a 5% increase in outside counsel spending.
Use these trends to guide your business plans. Target your clients and talk to your top clients about their plans; put these trends in front of them to learn their point of view. Asking is the only way to find out.
The firms who are discussing how these trends are impacting their clients, with their clients, are the firms first in line to get the new work.
We will be discussing these opportunities and much more in our upcoming Market Outlook and Client Service Review webinar on January 18 at Noon Eastern. You can learn more or register here.