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How Law Departments Spend

February 24, 2016

A 2015 survey of about 300 corporations found that median total legal spend increased two percent over the 2014 results, to $27 million, but the increase was not across the board. Certain operations fueled the trend more than others. Most organizations were trying to do more with less, as evidenced by their interest in controlling outside legal expenses and by their internal spending priorities. Dedicating funds toward new technology and talent retention are up-front investments that enable future savings in both hiring and the retention of outside counsel.

Law departments’ outside spending has plateaued, freeing up funds to be reinvested internally. In the 2015 survey, law departments outside counsel spending held flat, a notable difference from the two percent decrease reported in 2014. Corporate law departments are doubling down on cost management programs with a variety of tactics, including alternative fee arrangements, matter planning and budgeting, stricter budget guidelines and the increasing use of analytics. The median hourly rate survey participants paid to their top three law firms was $487, up from a median of $473.

Global median inside legal spending hit $12 million, a three percent increase from last year. More than half of organizations reported an increase in total legal department staff, with an emphasis on lawyers over support staff.

Total law department compensation across attorney ranks continues to rise, by 3.5 percent on average, to $334,300. The average value of long-term incentives now stands at almost $93,000.

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