CLOC reveals results of survey on internal and external expenditures for legal services

Twenty-eight per cent of respondents in a survey said they moved more work in-house, and 20 per cent said they outsourced more legal work, while the remaining reported no change in this ratio.

In its 2020 State of the Industry Survey, the Corporate Legal Operations Consortium asked companies about their internal and external expenditures for legal services in 2019.

The respondents spanned 146 companies, representing over 30 industries, from 17 different countries. Of the participating companies, 27 were Fortune 500 companies.

The median external expenditure for 2019, as determined by CLOC from the survey results, amounted to US$7.9 million, while the median internal expenditure was US$5 million. For each in-house attorney, the median external legal expenditure was US$404,000, while for each full-time employee at a legal department, the median internal expenditure was US$200,000.

The average number of full-time employees in legal departments, including attorneys, paralegals, legal operations professionals, administrators and others employed by the department, can go as high as 180 for large companies or as low as 38 for small companies.

The highest average legal department headcount across industries was 191 full-time employees for the biotechnology industry, while the lowest was 21 employees, applicable to the entertainment and media industry and to the energy, oil, gas and utility industry, both of which also had the lowest total expenditures. The technology and biotechnology industries reported the highest expenditures.

On the other hand, the average legal operations team comprises six full-time employees, although large companies average 14 employees, and companies belonging to the biotechnology industry average 26 employees. In large companies, a single legal operations employee supports an average of 11 attorneys, while in small companies, a legal operations employee supports an average of 6.5 attorneys. On average, a legal operations employee supports 15 legal team members.

The role of legal operations teams keeps expanding, said CLOC, which reported that 67 per cent of respondents stated that their legal operations team served as a strategic partner of the legal department. Sixty-nine per cent of respondents considered their legal department well-integrated with the strategy and objectives of their organization.

Technology is also increasingly being utilized to automate legal processes, with the most commonly used technology being eBilling. The use of eSignature and document management has also risen, while the use of contract management has decreased.

The full report may be accessed here.