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In House Legal Spending Slashed 25%

By Jason Beahm on November 23, 2010 5:47 AM

In light of the challenging economy, corporations are seeking to cut costs. One place where you can expect to see cuts are within your own legal departments. According to the ABA Journal, general counsels are looking to cut legal spending by 25% this year. The article, entitled "25% Cut in In-House Legal Spending Translates to Even Deeper Cuts for Outside Legal Work," discusses how and why legal spending will be down in 2011.

Specifically, most in house legal spending decisions boil down to this: is it cheaper to handle the problem in house or to use outside counsel? An ABA Journal columnist says it is almost always cheaper to use in house counsel.

The article delved into cost of production in a legal context, arguing it makes sense to reduce spending on outside counsel and maintain or increase spending on in house counsel. This means that spending on outside counsel will likely fall by more than 25% in 2011.

The second article, titled Catastrophe or Opportunity?, makes the case that the sky is, in fact, not falling. In fact, the cuts could actually be a blessing in disguise as they could force the legal profession to innovate. According to the author, that's because small, incremental improvements rarely accomplish big changes, but seeking dramatic improvements often leads to breakthroughs.

So when it comes to the cuts, is it really an opportunity? According to the ABA Journal piece, it's in the eye of the beholder:

"If you think it's a catastrophe, it will be; if you think it's an opportunity, it will be."

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