Five market trends that you can't afford to miss.

• Author: Shunk, Marcie Borgal

This year has heralded in a new reality for law firms. Growth in outside counsel spending slowed to a crawl after nearly five years of common double-digit increases. Single-digit growth, declining budgets and work that shifted in-house hit law firms hard. With economic uncertainty, crashing financial markets and shifting political powers, how can you best position your firm to weather the storm?

The BTI Consulting Group recently completely nearly 300 interviews with corporate counsel at large and Fortune 1000 companies. We scrutinized spending trends, legal budgets, risks and goals to decipher exactly where the legal services market is headed in 2009. BTI recognized five key trends you need to know in order to stay afloat during these rocky conditions.

[1] Growth in outside counsel spending virtually halts

2009 will usher in the third straight year of single-digit growth for the legal market. It's no surprise that corporate counsel are looking to rein in costs, but market growth for outside counsel services in 2009 is projected at just 1.9 percent [see chart "Growth in Outside Counsel Spending Virtually Halts." page 10].

Capturing a piece of this shrinking pie is essential to law firms. Capturing a piece of this shrinking pie is essential to law firms facing increased costs and tighter budgets within their own organizations. Savvy law firms are aligning closely with client needs and positioning themselves as strategic partners to maintain and grow primary relationships in a turbulent market. Take advantage of this robust list of top client needs for 2009 to help jumpstart your marketing and business-development strategies:

* Additional in-house staff;

* Better value from law firms. This includes creating and adhering to budgets, providing more businessspecific advice and offering alternative billing arrangements;

* Electronic records management;

* Streamlined business processes;

* Technological improvements; and

* Better regulatory understanding.

[2] Convergence is a reality Shrinking dollars are not the only hurdle to overcome in this downturn. Clients cut law firm rosters to record low levels. On average, corporate counsel rely on 42 law firms for their legal needs, cutting the number of firms used by almost 20 percent in one year. This trend is expected to continue through 2012 as clients anticipate shrinking rosters by another 26 percent.

Successful law firms hyper-focus on client retention to ensure their client relationships will last...