The findings of the 2010 ALB China In-house Survey have delivered a positive message to law firms. According to the results, only 17% of the polled legal departments stated their budgets for legal spend on external counsel have contracted compared to last year, while 49% have seen an increase in 2010 budgets and 33% said their budgets remain the same.
As in-house teams continue to grow in both size and capability, more work will inevitably be handled internally. Companies won't outsource as a matter of course anymore, but will only engage external counsel in particular circumstances. However, when they do outsource work, they will require high-quality performance, quick turnaround time on a specific issue, and in most cases they'll be willing to pay a fair price.
"We should keep in mind that law firms have a broad range of resources at their disposal and offer a wider pool of expertise. That's why they still have an important role to play. International firms will also be increasingly useful, particularly to Chinese companies that have more international exposure and increasingly need to handle legal matters outside the country," said a general manager of the legal department in a large state-owned enterprise.
"Good collaboration and relationships between in-house and external legal teams helps the company better manage legal costs and derive more value from the services," he added.
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This year’s budget for legal spend on external counsel is
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Less than US$10K
|
9%
|
|
US$10K-100K
|
23%
|
|
US$100K-250K
|
27%
|
|
US$250K- 500K
|
11%
|
|
US$500K-1M
|
14%
|
|
US$1-5M
|
9%
|
|
US$5-10M
|
5%
|
|
other
|
2%
|
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Compared to last year, your budget for legal spend on external counsel has
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contracted by 1-20%
|
9%
|
|
contracted by 21-50%
|
7%
|
|
grown by 1-20%
|
30%
|
|
grown by 21-50%
|
14%
|
|
grown by 50+%
|
5%
|
|
other
|
2%
|
|
remained the same
|
34%
|
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Percentage of legal work your company outsources
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1-20 %
|
56%
|
|
21- 40 %
|
29%
|
|
41-60 %
|
11%
|
|
60+ %
|
4%
|
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Your legal department will most increase the use of
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large national domestic law firms
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37%
|
|
mid-size/specialty domestic law firms
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32%
|
|
international law firms
|
20%
|
|
regional domestic law firms
|
11%
|
|
very small firms
|
0%
|
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Three types of legal work companies outsource the most
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Litigation and arbitration
M&A
IP
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*To find out more about the issues in-house legal departments face in 2010 and how their external service providers should adapt their offerings accordingly, please see the full 2010 ALB China In-house Survey Report published in the April edition of the ALB China magazine.