Posted: Mar 3, 2010

More chief legal officers are planning to add to their legal departments this year, according to the results of a survey conducted by the Association of Corporate Counsel (ACC).

Almost one third (29%) of the 970 respondents to this year's Chief Legal Officer Survey said they are planning to recruit more lawyers for their departments this year, up from 23% last year.

However, this is not a sign that the economy is recovering and budgets constraints are easing, said ACC deputy GC James Merklinger. Rather, Merklinger said, the increase in hiring suggests that the recession is forcing chief legal officers to change the way they operate; bringing more work in-house, spending less on outside counsel, and boosting spending on alternative fee arrangements.

"This may be part of an overall restructuring that lets them be more efficient and effective, and that's a good sign," said Merklinger. "The economy has raised the awareness that it is time to do things differently."

The survey, now in its 10th year, also found that more than a third (34%) of respondents have cut spending on outside counsel.

When hiring outside counsel, respondents said they are now more likely to negotiate alternative fee arrangements to cut costs than they have been in the past. Forty-four percent relied on such arrangements in 2009, compared to 41% in 2008. Nearly four out of every five of the in-house lawyers surveyed expressed a desire to increase their spending on outside counsel under alternative fee arrangements this year.

Not everyone agrees these changes reflect a long-term trend. Chief legal officers are still cautious in this economy, said legal consultant Rees Morrison (pictured). Morrison argued that chief legal officers had less work to give to outside counsel last year. "In a recession, there's just less business going on," he says.

However, most chief legal officers who responded to the survey disagreed. Just over half said their workload has actually risen, thanks in part to increased regulation. Indeed, 57% of survey respondents said they are concerned by growing scrutiny from regulators that their companies are now subject to.

Even with the recession and a heavier workload, chief legal officers said they still like their jobs. Just over 90% said they are satisfied with their chosen career, up from the 88% who said the same thing last year. That, Merklinger said, is because most chief legal officers like challenges and solving problems.

"It's a chance for them to shine. It's a chance for them to prove their value," says Merklinger. "They view it as opportunity."

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This article first appeared on Corporate Counsel, a US sister title of Legal Week.

To obtain a copy of the survey visit www.acc.com/closurvey09.