The $5 million threshold, “at which level general counsel start wanting software to assist”

A speaker at a recent conference told the attendees that “at about $5 million in spend on outside counsel, law departments start wanting some technology, like matter management and e-billing.” To be sure, the speaker was hardly disinterested, being an executive from a legal technology company, but the point he made deserves consideration.

At typical benchmarks of approximately $600,000 in outside counsel spend per lawyer, the $5 million threshold puts the department at seven-to-nine lawyers, of which at least half probably manage outside counsel (See my post of Aug. 27, 2005: about one litigation lawyer per ten inside lawyers; and May 21, 2008: surmise that less than half of inside lawyers in medium-size departments manage outside counsel.). The amount spent externally, the pressure to manage to a budget, the desire for metrics, the need to coordinate efforts all create in general counsel a yearning – plausibly around the $5 million mark – to automate analysis and reporting of spend data.

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