Law Department Management Kirkpatrick Survey: Corporate Counsel Concerns Shifting To Bread-And-Butter Issues

Thursday, July 1, 2004 - 01:00

Compliance may keep corporate counsel busy, but it's not keeping them up as late. This was one of the key findings of the recently released second annual Top of Mindª Survey of senior in-house counsel sponsored by the firm of Kirkpatrick & Lockhart LLP.

After listing corporate governance as the most challenging area of law in the first annual survey, respondents to the latest survey showed a 17 percent decrease in counsel mentioning corporate governance legislation as their biggest concern. In the latest survey, only six percent rated corporate governance legislation as "most challenging area of law next year," compared to 23 percent in the first survey in 2002, the year the Sarbanes-Oxley Act was adopted.

Several themes emerged from the second annual survey including:

• Law firm bills keep climbing, as do corporate counsel's perceptions of the value they are receiving;

• The legal profession too often trails the times when it comes to diversity;

• Corporate counsel yearn for effective, open communication.

In the second Top of Mind Survey in the autumn of 2003, The Brand Research Company, an independent research firm hired by Kirkpatrick & Lockhart, conducted telephone interviews of 145 senior in-house counsel to find out what was "top of mind" for them. The questionnaire was based on focus groups and what was learned from the original survey in 2002. The research, done in conformance with the generally accepted research principles of CASRO and ESOMAR, had a confidence level of 95 percent. All respondents held senior level positions, with many serving as the primary decision-makers within their departments.

Responses were divided among counsel from Fortune 500 companies (companies ranked from 1 to 500 on the magazine's list) and Fortune 1000 companies (additional companies ranked from 501 to 1000).

With corporate attorneys developing a greater appreciation of the complexities of Sarbanes-Oxley and related laws, the largest group of respondents (21 percent) shifted to bread-and-butter concerns, rating employment issues as "the most challenging area of law next year," with 15 percent of respondents rating employment issues as "the biggest challenge in the next five years."

The survey showed that costs for outside law firms keep rising. Sixty-four percent of surveyed Fortune 500 attorneys and 54 percent of their Fortune 1000 colleagues reported an increase in their legal bills for outside counsel.

With rising bills, in-house counsel see money as a key stressor. Sixteen percent of Fortune 500 respondents and 2 percent of Fortune 1000 respondents listed controlling costs of outside counsel as the "biggest challenge overall" for their own departments. Twenty-two percent of Fortune 500 lawyers and 12 percent of Fortune 1000 lawyers rated keeping overall costs down as their "biggest challenge."

At the same time, 16 percent of Fortune 500 lawyers and 22 percent of Fortune 1000 lawyers indicated they spend much of their time working to keep their companies in compliance with ever-stricter regulations.

On the look of legal departments, respondents said that while women make up nearly half of the lawyers at Fortune 500 companies, they constitute only a quarter of in-house counsel at Fortune 1000 companies. Fortune 500 companies also employ more than double the percentage of African-American attorneys - though at 5.0 and 1.9 percent, neither Fortune 500 nor 1000 departments have a large African-American population, survey results showed.

Corporate counsel at Fortune 500 and 1000 companies also admit that diversity is not a key factor to them when choosing outside counsel. Overall, they rate racial diversity only 3.3 (on a scale of 0 to 10) in importance for bet-the-company matters. That rises slightly to 4.1 for routine matters.

According to the survey, 60 percent of in-house attorneys believe their outside counsel provide an excellent value - a rating of 8 or higher on a 0 to 10 scale - a significant increase from the already high ratings in 2002.

The survey also showed that in-house counsel believe that the best way for outside counsel to increase their value is to pick up the phone. When choosing a law firm for bet-the-company cases, 89 percent of corporate counsel rank effective communication as a top factor. The trend is similar in routine matters, where 87 percent gave open dialogue a high rating.

For questions and comments, or suggestions for future surveys, e-mail