CHICAGO--(BUSINESS WIRE)--Companies worldwide increased total legal spend by 2 percent, according to HBR Consulting’s 2014 Law Department Survey.
“The aggressive measures taken by law departments to control and manage their costs are having a direct impact on legal spending,” said HBR Consulting Senior Director and Survey Editor, Lauren Chung. “This year’s results indicate that law departments have been effective in their cost containment efforts, particularly with their outside counsel spending. While total legal spending increased by 2 percent, outside counsel spending decreased by 2 percent on a worldwide basis.”
“This year’s results align with what we see in our work with law departments,” said Kevin Clem, who leads HBR’s Law Department Consulting practice. “The use of technology to manage legal spending has become more prevalent through increased adoption of data analytics tools. In this year’s survey, 50 percent of participants cited the use of data analytics to select and improve negotiations with outside counsel. Law departments are seeing that investment in law department technology strategies and implementations are making internal processes more efficient and cost effective.”
Key spending and staffing data from the Survey include the following:
- 2013 total worldwide legal spending increased by 2 percent according to this year’s survey. Inside legal spending (cost on compensation and operating expenses for the law department) climbed 5 percent, while spending on outside counsel decreased 2 percent.
- In the U.S., total legal spending rose 1 percent during 2013. Contributing factors to the overall rise included a 4 percent increase in inside counsel spend partially offset by a 1 percent decrease in outside counsel spending.
- Outside the U.S., legal spending showed signs of growth across the board. Total legal spending increased by 4 percent, compared to a mere 1 percent increase reported in the 2013 Survey. More specifically, inside legal spending grew by 4 percent and outside counsel spending also rose by 1 percent.
- The results indicate in-house staffing is increasing steadily. Worldwide, 55 percent of participants reported an increase in the total number of lawyers employed in 2013 versus 2012. Additionally, 61 percent of participants increased their total number of legal staff worldwide.
HBR Consulting’s Law Department Survey provides comprehensive data on legal spending, staffing, organization, compensation and management practices. The 2014 Survey also reports information on how current economic and regulatory environments are impacting law departments.
This year, the Survey had a record-breaking number of participants with a total of 292 companies, up from 280 participants in the 2013 Survey. Nearly 70 percent of participants had revenues equal to or above the 2013 Fortune 500 level, of which 28 percent had more than $20 billion in revenues; this includes companies that are privately held or based outside the U.S. The 2014 Survey includes data for both 2012 and 2013.
Unique among law department surveys, HBR Consulting’s Survey boasts a 30 year history, focuses on larger law departments, includes both global and U.S. law departments and emphasizes data consistency and rigorous quality control procedures. Included in the Survey purchase is a consulting session with one of HBR’s consulting experts to provide guidance on actions law departments and law firms can take in response to this year’s results.
Law Department Spending
The median total legal spending was $29.7 million worldwide and $26 million in the U.S. Total legal spending as a percent of revenues worldwide was 0.34 percent. The median inside legal spending was $12 million worldwide. Inside legal spending as a percent of revenues worldwide was 0.13 percent. The median outside counsel spending was $15 million worldwide. Outside counsel spending as a percent of revenues worldwide was 0.19 percent.
Legal Staffing
The median company reported 32 lawyers worldwide and 21 lawyers in the U.S. Per billion dollars of revenues, the median company had 3.6 lawyers worldwide. The median number of total law department staff (including lawyers and all non-lawyer staff) was 57.5 worldwide. Per billion dollars of revenues, the median company had 6.8 total legal staff worldwide.
Forecast for Legal Services
The participants were asked to forecast their demand for legal services across 28 different legal practice areas. The top three areas where demand is anticipated to increase were International (52% of participants selected), Regulatory (44%) and Commercial Contracts (39%).
About HBR CONSULTING
HBR Consulting (www.hbrconsulting.com) is internationally recognized as the leading business and technology operations consultancy in the legal industry. Formally Hildebrandt Baker Robbins, HBR Consulting continues to expand on its foundation as a leading provider of consulting services to the legal industry. With more than three decades of experience, HBR Consulting helps law firms and law departments plan, implement, and measure business, information and technology initiatives with a specific focus on increasing operational efficiency and effectiveness. HBR Consulting helps clients holistically address their needs in the areas of Advisory, Managed Services, and Software Products.
For more information about how to purchase the full HBR Department Survey, visit www.lawdepartmentsurvey.com or call 215.628.3409.
