Large and Small Law Departments Diverge on Spending, Management

Download the 2017 Chief Legal Officer Survey

280 law department leaders respond to 2017 Chief Legal Officer Survey

November 14, 2017 – Altman Weil's 18th annual Chief Legal Officer Survey provides insights into the state of in-house law departments from the perspective of their chief lawyers. This year, for the first time, the survey also includes breakouts by department size to provide more depth and detail on management approaches and spending decisions. 

“The survey shows law departments with over 50 lawyers doing much more than smaller departments to improve internal efficiencies, manage outside resources, control costs and utilize professional administrators and staff," according to Altman Weil principal and survey co-author James Wilber. "Smaller departments simply have fewer resources to devote to these important initiatives and positions."

Highlights from the 2017 survey include:

Total law department budget: 45% of law departments increased total department spend in 2017; 36% decreased their budgets; and, 19% made no change.  However, in law departments with over 50 lawyers, only 22% increased their total spend in 2017, while 59% made cuts. 

Outside counsel spend:  Outside counsel spend is the only budget category in which more departments made cuts (41%) than those that made increases (32%) in 2017.  Here, one-lawyer departments are the outliers, with 59% reporting they increased outside spend while only 12% reported a decrease.

Planned 2018 spending: For the first time since 2007, more law departments say they plan to increase their outside counsel spend next year than those that anticipate a decrease.  Departments with 1 to 10 lawyers are driving this change in direction.

Law department negotiating power: What percentage of outside counsel fees last year were for work that could have been done by many different law firms? The median response across all department sizes is 41% to 50% of outside spend - suggesting that law departments have considerable negotiating power.

Outside counsel management guidelines: Although 79% of all law departments provide law firms with guidelines for billing, expenses, matter staffing and matter management, only 60% say they routinely enforce those guidelines.  In one-lawyer departments only 32% enforce guidelines, and in 2 to 10 lawyer departments only half do so.

Top cost control tactic: The top cost control technique is price reductions from outside counsel, reportedly received by 64% of all law departments and by 78% of the largest departments surveyed.

Top efficiency tactic: The most frequently used efficiency tactic in law departments is a greater use of technology tools, named by 58% of all respondents, and by 81% of departments with over 50 lawyers. 

Most effective tactic to improve efficiency and control costs:  Outsourcing to non-law-firm vendors scores highest in effectiveness for efficiency and cost control, although it is one of the least used tactics in each category. Large law departments are significantly more likely to include outsourcing in their toolkits.

“It's ironic that while most law firms want to work for the biggest and best-known companies, the survey shows that law departments in larger companies are generally more sophisticated and demanding consumers of legal services,” says Rees Morrison, Altman Weil principal and survey co-author. 

The Survey
The Chief Legal Officer Survey has been conducted and published annually by Altman Weil since 2000, most recently in September and October 2017.  Two hundred eighty responses were received for the 2017 survey, 21% of the 1,332 corporate law departments invited to participate.  Demographic and budgetary data on responding law departments is also included in the survey report. The full survey is available to download at www.altmanweil.com/CLO2017.

About Altman Weil
Founded in 1970, Altman Weil, Inc. is dedicated exclusively to the legal profession.  It provides management consulting services to law firms, law departments and legal vendors worldwide.   The firm is independently owned by its professional consultants, who have backgrounds in law, industry, finance, marketing, administration and government.   More information on Altman Weil can be found at www.altmanweil.com.

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