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InsideCounsel/DataCert Report Finds General Counsel Battling Increased Legal Spend with Restricted Resources

Ninth Annual Report of Corporate Law Departments Reveals Near-Flat Budgets, Limited Staffing and Larger Workloads

HOUSTON, June 22, 2006 - General counsel and in-house counsel face the challenge of doing more with less, according to the Ninth Annual InsideCounsel/DataCert Report of Corporate Law Departments. The report, which surveyed general and in-house counsel from FortuneŽ 500 corporations, is available online at http://www.insidecounsel.com/issues/insidecounsel/pdfs/AnnualReport9.pdf.

According to the report, the median law department budget in 2006 increased by only 9 percent compared to the previous year. While 52.7 percent of the law departments surveyed indicated that they will not increase the number of in-house attorneys, one-half agreed that shifting work from outside counsel to inside counsel is an effective way to reduce costs. In fact, three-quarters of the law departments that responded admitted to already following this method.

These results all point to one conclusion: corporate law departments are handling more work.

"Using limited resources to handle an increased workload is a common dilemma shared by the surveyed in-house counsel," said Robert Vosper, executive editor of InsideCounsel. "Current governmental regulations, coupled with recent, high-profile SEC investigations, have triggered a larger compliance-related workload for corporate law departments. In turn, general counsel are now focusing on cost control strategies to combat the end result of escalated outside counsel spend."

In addition to bringing more work in-house, law departments are also transferring work from in-house counsel to in-house paralegals, temporary staff and interns. In all, 35.9 percent of the questioned law departments have implemented this measure. However, this shift in the work balance does not always translate into new hires. A third of the law departments answered that they have hired non-attorney support within the past three years, while 48.6 percent have not increased their support staff.

One of the most commonly practiced tactics for controlling legal spend is to implement matter budgeting. Eighty percent of the law departments surveyed require their outside counsel to submit matter budgets in all or some matters.

"Monitoring compliance with individual matter budgets is a time-consuming issue that must be reconciled on a regular basis," said Jeff Bolke, vice president of sales and marketing for DataCert. "With the widespread endorsement of this cost-saving measure from the respondents, it is comforting to know that systems such as electronic invoicing and legal spend management can help automate this process."

Negotiating alternate fee arrangements with outside counsel, such as discounted hourly fees or flat-fees, garnered less support in the report responses. A total of 31 percent of the law departments that responded asked for fee concessions and only 8 percent used more aggressive processes such as competitive bidding in the outside counsel selection process.

While law department budgets overall increased slightly in 2006, 90 percent of the respondents admitted that those increases did not extend to the operating budgets for legal technology. Another hurdle to acquiring and/or upgrading legal technology is the fact that 70 percent of the surveyed general counsel admitted that all or some technology purchases must be routed through corporate IT departments for approval. This adds personnel to the decision-making process that might not fully understand a law department's need for certain technologies. Consequently, the report discovered that only 14 percent of the questioned law departments use an electronic invoicing system to manage outside counsel spending.

The InsideCounsel/DataCert Ninth Annual Report of Corporate Law Departments consists of answers from more than 180 in-house counsel surveyed in January 2006.

About InsideCounsel

Launched in 1991, InsideCounsel is the pioneering monthly magazine exclusively serving general counsel and other top in-house legal professionals. Formerly known as Corporate Legal Times, InsideCounsel is the oldest monthly magazine published specifically for in-house counsel. It has a monthly circulation of 40,000, including more than 22,000 chief legal officers, VPs and general counsel.

About DataCert, Inc.

DataCert, Inc. is the largest and fastest-growing supplier of electronic invoicing and corporate legal spend management solutions. DataCert's products and services provide a substantial return on investment to corporations looking to reduce outside legal spend. Headquartered in Houston, DataCert has over 6,300 customers, 56 of which are FortuneŽ 500 companies. On an annualized basis, DataCert processes in excess of $9 billion of e-invoicing data. Visit DataCert at www.datacert.com for more information.