Outside legal work consolidation on the rise – report

Companies are scaling back on the number of law firms they hire – meaning a bigger slice of the pie for the firms that make the cut

Outside legal work consolidation on the rise – report
More and more companies are consolidating their outside legal work, resulting in fewer firms on panels each getting a bigger slice of legal spending.

In the latest LexisNexis CounselLink Enterprise Legal Management – Trends Report, 62% of companies were found to have had 10 or fewer law firms account for at least 80% of their legal spend in 2016. This is a significant increase from the 57% recorded in the previous report.

The study showed that 28% of companies spend 80% to 90% of their legal fees on 10 or fewer firms, while 34% pour 90% or all of their legal spend into 10 or fewer firms.

LexisNexis analysed data from legal departments that process billing information through the company’s CounselLink platform. The latest trends report reflects data from more than US$26bn in legal spend spread across almost six million invoices. The CounselLink platform was used for about 1.5 million matters, by corporates in a wide range of industries.

The type of industry plays a significant role in the level of legal spend consolidation, the report said. The most consolidated companies are in retail trade (77% spending at least 80% of legal fees on 10 or fewer firms); information (71%); manufacturing pharmaceutical (70%); and professional, scientific, and technical services (69%). The companies least consolidated in legal spend were in the insurance sector (42%).


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