The legal market finally is getting exciting again. Clients have premium rate worthy needs. Complex work is one of the few growing segments. In addition, corporate counsel have truly new needs which are siphoning precious dollars from the low priority needs. The only challenge is how you can get to the new work. This new work is being awarded on a select basis and the lower priority needs are being put out to RFP—or heading to procurement at larger companies.
We have discussed the Litigation Market Outlook in detail. Today’s post will focus on the other $80 Billion large companies spend on their legal needs. The top 5 trends and changes in client legal spending for 2017 are:
4 of the 5 Largest Practices Getting More Legal Budget in 2017
While Litigation shrinks, Employment, Securities, IP and M&A will receive a bigger portion of the budget. Much of the new work will be advisory and counseling in nature—this means the law firms in conversation with their clients are best positioned to capture this rare incremental spending coming into the market.
Cybersecurity and Data Privacy Demand Outstrips Supply
As hard as law firms try, they just can’t keep up with demand. Breaches and risk are growing and outpacing the ability to find the attorneys. Law firms are bringing in high-powered laterals from government which helps the brand, but can’t make a dent in demand. Top legal decision makers are becoming more receptive to using consultants and non-attorneys to help—which may also be a source of talent for law firms.
Corporate Legal Spending Hits Record
Large clients are now spending more, on a per company basis, than ever—beating the last record by an average of $200,000 to $1 million per company. The record is a direct result of clients bringing work in house. This proves clients have increasing needs and are changing the way they operate to accommodate their frozen budgets.
Banking, Financial Services, and Pharma Show Most Need for Complex Work
3 of the biggest legal spending industries are driving the new demand for complex work. Top legal decision makers in the Banking, Financial Services, and Pharmaceutical industries are facing widespread public, government, and investor scrutiny and all manner of public attention. These industries are also undergoing change and trying to stay in compliance while charting new strategies—including a few monster-sized mergers and transactions.
Flat Markets Mask Legal Crosscurrents and Enormous Opportunity
The action in the legal market is under the surface. Overall spending is up a fraction which may sound bleak. But, new needs and a surging market for complex work offer substantial opportunity for law firms willing to swim under the surface. Clients are moving money around to accommodate the higher risk work.
Any movement in the legal budget is opportunity for someone. Don’t look for the RFPs, as clients are awarding this work on a selective basis. The top decision makers are talking to their law firms about the new issues to test commitment and interest—some law firms take the bait, others don’t. If you are not talking to your clients about these issues start seeking them out—now.
You can read all the details on how these trends are affecting 17 practices and 16 industries—and make the best decisions for your firm based on data and insight straight from your clients on how they plan to divvy up their outside counsel budgets in 2017—in the just released BTI Practice Outlook 2017.