Study: In-House Legal Spending is Increasing

After two years of declines, overall legal spend is rising, according to the 2nd Annual Study of Effective Legal Spend Management released by Exterro Inc., a software provider specifically designed for in-house legal and IT teams at Global 2000 and AmLaw 200 organizations and the Blickstein Group.

The report provides an in-depth look at what law departments are doing to manage spend and control costs – and what is actually working. Fifty-nine in-house legal decision makers evaluated 22 different techniques for minimizing legal spend and the report weighs the frequency of use in addition to the effectiveness of each technique.

“The findings in this year’s study follow what our clients have been experiencing – that moving work in-house leads to cost savings and creates efficiencies for legal departments. As legal department operations continue to mature, we expect to see more work moving in-house and legal teams continuing to use data and process optimization to more effectively manage their work,” said Bill Piwonka, CMO of Exterro.

Key findings of the study include:

• 43 percent of respondents expect legal spend to rise and only 24 percent of respondents expect their legal spend to decrease this year.
• The increase in legal spend is coming from in-house spend, with 48 percent of respondents expecting their total inside legal spend to increase.
• Conversely, outside legal spend is decreasing or remaining flat for 60 percent of respondents.
• The most commonly used technique for minimizing legal spend is negotiated rates/discounts while the most effective technique is e-billing enforcement of guidelines.
• Respondents consider themselves effective at controlling their e-discovery spend (62 percent rated themselves at least a 3 on a 5-point scale).
• Bringing more of the e-discovery process in-house was given a 4.16 rating (out of 5) on effectiveness as a technique to control e-discovery spend and more than 75 percent of respondents are using this technique.

“What’s interesting is how law departments are deploying their budgets. Forty-eight percent of our respondents expect their total inside legal spend to increase, up from only 25 percent last year. Perhaps such a jump is no surprise considering respondents listed ‘moving work in-house’ as one of the most common ways to control legal spend. They also reported that inside spend provides more visibility and accuracy in budgeting. Meanwhile, outside spending is expected to decrease slightly,” said Brad Blickstein, principal of Blickstein Group.

The survey was developed with the guidance from an advisory board made up of senior level e-discovery and legal professionals. It was completed by legal operations executives, general counsel, and attorneys from a variety of industries across the United States.

Source: Exterro