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Compliance: Legal Costs are Down, but Expected to Grow
Since the introduction of Sarbanes-Oxley more than five years ago, the corporate legal staff has grown and legal fees have continually increased. Now, somewhat surprisingly, with the threat of even more regulations on the horizon following the scandals and fiscal downturn that started in 2008, companies are cutting back on their legal costs. A BTI Consulting Group report shows that companies spent about 7 percent less in the first quarter on legal costs compared to a year ago.
In the list of top Technology Companies top 20 risks reported here yesterday, regulatory compliance slipped significantly as a high concern. But the drop in legal fees isn’t because there is a cut back in attention to compliance. Costs have dropped primarily because there is less activity happening right now in areas like litigation, mergers and acquisitions, environmental issues, and intellectual property.
The BTI report in fact expects the drop in legal fees to be a temporary blip, and is predicting five percent growth by the end of the year. And the focus for companies going forward is on “risk aversion”.
