A power shift is going on, where in-house legal departments are taking a lead role in their own legal matters and turning to outside firms less often.

Dramatic economic and business occurrences over the past five years, including the 2008 financial crisis and its aftermath, signaled the beginnings of a power shift from large law firms to in-house law departments, reported the Association of Corporate Counsel in its ACC's 2011 Census Report. The ACC's 2011 Census Report, along with ACC's CLO Survey, revealed that budgets for in-house legal departments have increased by more than 18 percent.

In addition, ACC's 2011 Census Report indicates that in-house counsel are turning less frequently to outside counsel to handle their legal matters and they are handling more work in-house. In 2011, only 20 percent of the in-house respondents turned to outside counsel for tax issues, compared with 30 percent in 2006 and 31 percent in an earlier, smaller survey in 2004. Respondents who went outside for mergers and acquisitions declined from 35 percent in 2006 to 28 percent in 2011. In litigation, where there has traditionally been a heavy reliance on outside law firms, the number declined from 69 percent to 65 percent.

"Read together, the 2011 ACC Census and 2011 ACC CLO Survey reveal that the in-house profession is growing and having a greater impact within their companies,” said ACC President & CEO Veta T. Richardson. “This increase in responsibilities reflects the evolving role of in-house counsel and the priority they are placing upon serving the business and legal counseling needs of their companies. Despite the diversity of regulatory challenges and heightened level of accountability facing in-house counsel, job satisfaction remains high, as was reported in the ACC CLO survey, which reflects the resiliency and commitment of the in-house bar.”

The ACC 2011 Census Report also reports that, notwithstanding challenging economic times, many in-house counsel experienced a rise in compensation, with 22 percent earning more than $300,000 in salary, bonus and other compensation. Without adjusting for cost of living variations, this is an increase of 16 percent over those earning $300,000+ in 2006, and 57 percent over 2004.  

“Top in-house counsel have proved their value, both in their traditional roles as legal advisors, and in the oversight of outside counsel expenditures,” explained James A. Merklinger, ACC Vice President and General Counsel. “Now, more than ever, they are taking steps to proactively reduce their companies' outside counsel spend. By implementing value-based billing arrangements and other innovations advocated as part of ACC's Value Challenge, in-house counsel continue to increase the level of sophistication and assertiveness they employ to achieve the best results for their companies.”