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Covid-19 Forces Legal Chiefs to Do More with Less, Survey Says

Nov. 17, 2020, 8:28 PM

Corporate legal departments have mostly avoided coronavirus-related layoffs this year, but well over half are facing lower revenues while an even higher portion have heavier workloads, according to a survey published Tuesday.

Legal consulting firm Altman Weil, based in Newtown Square, Pa., surveyed over 100 law departments of varying sizes, from companies with revenues ranging from less than $1 billion to over $20 billion, on their responses to Covid-19.

The annual Chief Legal Officer Survey found that legal departments of all sizes are juggling more work with fewer resources as the pandemic drags on. Of the respondents, 66% said that their company revenues are down this year in response to the pandemic, while 77% said that their workload is up.

“These pandemic-driven dynamics accelerate the law department’s perennial problem of doing more with less. But they may also create a new level of urgency and focus to make hard choices about law department staffing, spending, efficiency and resource allocation,” said James Wilber, a principal at Altman Weil and leader of its law department consulting practice, in a statement.

Law departments appear to be finding ways to save money as companies tighten their belts.

According to the survey, 44% plan to cut their 2021 budgets, while only 39% plan to grow them, the first time in a decade that the survey has found more departments will cut than increase their budgets.

In addition, 11% of respondents have laid off employees in response to Covid-19, with support staff and paralegals as the most common layoff targets. Like law firms, law departments have said that tech and efficiency efforts have recently combined with tighter budgets to prompt support staff layoffs.

Legal departments also continued asking law firms for discounts, as in past years, but 33% asked for further discounts in response to Covid-19 pressures.

Wilber said in an interview that law firms may not be doing enough for their clients in a difficult time.

Though the vast majority of respondents said their outside firms offered general guidance on virus-related issues, only 12% reported that firms offered to collaborate on new alternative fees and 10% proactively offered new discounts to clients.

Respondents overwhelmingly said free assistance from law firm associates was the most helpful thing they could receive from a law firm during the pandemic, but only 2.6% said their outside firms had offered it.

“I can’t imagine there aren’t law firms that have some underutilized associates, and they’re still on the payroll. Why wouldn’t you want to be seeing if you can’t offer free assistance from some of these associates to your best law department clients?” Wilber said.

Big Law firms have generally performed better than expected this year, and some of the richest have announced special fall bonuses for their associates ranging up to $40,000.

Other findings from the survey include:

  • 77% of chief legal officers believe work-from-home options will be permanent.
  • 18% of law departments reduced non-law-firm spending this year, up from 9% in 2019.
  • 36% of law departments plan on adding in-house lawyers in the next year.

To contact the reporter on this story: Ruiqi Chen in Washington, D.C. at rchen@bloombergindustry.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Chris Opfer at copfer@bloomberglaw.com

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