This 2021 Legal Department Management report from the Association of Corporate Counsel and Major, Lindsay & Africa is quite revealing, but also not surprising. Many of us have preconceived notions, borne from actual on-the-ground experience this study validates. Here are just a few key observations:
- Large law departments have an average budget of $64 mm per annum. These same departments spend 55% of this budget on outside providers (I'm guessing that's mostly law firms with a sprinkling of technology and perhaps some law company spend). Wow. I think there's an opportunity here. I trust you agree.
- Law departments use an average of 36 law firms. Large law departments use an average of 158 law firms! Counsel convergence? Remember that back in the day? Looks like on average, we're still where we were 20 years ago. Opportunity awaits!
- On a related note, law departments use less than two law companies (the artist formerly known as the alternate legal service provider). One wonders if the 36 law firms are focusing only on substantive legal work or also doing routine work like negotiating routine commercial contracts. I don't wonder; I know. Economic efficiencies, cycle time acceleration, and risk controls can be achieved by shifting the calculus here.
- 83% of law departments still have (discounted) hourly rate arrangements with law firms. Gulp. Did I miss a memo here? Is this good?
The report also included findings on disability, diversity, equity, and inclusion which, together with findings from the 2021 CLOC State of the Industry survey (produced by the Corporate Legal Operations Consortium and the ACC), reveal some interesting datapoints:
- Only 50% of law departments track disability metrics. Further, less than 20% track neurodiversity (I'll let folks look that one up). Surprising? Not so much. Disability inclusion has a long way to go.
- On the DEI "taking action" side, a majority of law departments indicated that implementing diversity, equity, and inclusion program is a top priority. Yet, executed programs are sparse. Disability inclusion is a footnote when searching for actual "programming" that makes a difference.
So, where's the good news in all this? Well, the issues of diversity, equity, and inclusion are in the mind space of law departments. The ACC/MLA study and the CLOC/ACC report together underscore that such sorts of stats are important and therefore worth measuring. As they say, "you can't manage what you don't measure."
For now, I'll take some solace in that -- along with celebrating the fact that in my natural professional (and personal) lifetime, the opportunities to create efficiency in legal services will not dissipate.
"[The study] received survey insights, between March and May of this year, from 493 legal departments, spanning 24 industries and 30 countries."