The economy's not bad for everyone — corporate lawyers are getting raises

Forget a healing housing market or the slow march toward 7 percent unemployment — you know the economy’s recovering when corporations start paying their lawyers more.

According to a survey released Thursday by Chicago-based consultancy HBR, large companies are spending 3 percent more on their legal endeavors in 2013 than they did in 2012. While that’s barely enough to keep up with inflation, the rise is notable in an industry that’s faced enormous cuts in the years since Lehman Brothers took its last gasp. “It’s stabilizing,” says Lauren Chung, a senior director in HBR’s legal consulting practice and the survey’s editor. “Spend was down for a while, and now it’s up — not significantly, not enough to make up for previous losses, but a healthy increase.”

Most of the jump is due to a 5 percent increase in the budgets for in-house legal departments, which includes both operating expenses and counsel salaries. Corporate spending on outside counsel rose just 2 percent, largely due to increasing rates — up $3 from last year’s survey to $461 per billable hour. “On the internal side, it’s more promising,” Chung notes. “In-house legal positions are steady, activity is increasing.”

The increase in U.S. spend buoyed the overall numbers. Outside of the country, corporations increased their allocation by just a single point; the spend on outside counsel actually dropped one percent internationally. U.S. companies also tend to hire more attorneys — 7.4 per billion dollars of revenue, as opposed to 6.5 per billion dollars of revenue outside the country.

This is the second consecutive year that overall corporate spending on legal services has taken a jump. HBR’s 2012 survey pegged the annual increase at 5 percent. In 2010 and 2011, spend dropped two and one percent, respectively.

The news is likely to be particularly welcome at law schools, where corporate austerity has caused much hand-wringing. At Northwestern’s School of Law, this year’s class size was cut by 10 percent in an effort to match perceived demand. “When markets change, you have to change,” Northwestern’s president, Morton Schapiro, told Grid in May.

HBR surveyed 280 companies around the world to collect its data. 26 percent had revenue of more than $20 billion.