An article in Tuesday’s ABA Journal online reports that legal departments cut spending for the first time in 10 years. This is based on the Hildebrandt Baker Robbins 2010 Law Department Survey. The results are significant because the 9 previous yearly surveys showed a 5% to 9% increase each year in law department spending; whereas the current survey shows total legal spending down by one percent in the U.S. and 2% worldwide (outside law firm spending down by 5% and 6%, respectively). That is momentous.

What it all means is that law firms are going to have to get real smart, real fast when it comes to project management. With a reduction in spending by legal departments, two things are going to happen:

  1. Smaller and mid-size firms will pick up more work that normally was done by larger firms, simply because they can do it cheaper and just as effectively in most cases; and
  2. Larger firms are going to be adopting project management religion very quickly, so that they can do the work more efficiently and effectively on less dollars, if there is any hope of maintaining their standard of living.

That creates important marketing and business development opportunities for firms that understand the ramifications of lower legal spending levels.