Who knows how much US law departments spend per year on US law firms?

  1. According to one source, the top 200 law firms in the US earned $84 billion in 2008 (See my post of July 7, 2009: 200 largest US law firms and their revenue in 2008.). I have not seen estimates of what portion of these firms’ fees come from corporate entities – let alone corporations with legal departments, but it seems plausible that 90 percent comes from them (about $76 billion).

  2. Another source announced that “The US corporate legal services market generates $96 billion per year in spending of which spending on outside counsel accounts for $64 billion” (See my post of Feb. 26, 2008: estimates total US law department expenditures.). come from the US law firm revenue in their international operations? I have no idea how much revenue the international branches generate, but at least 15 percent might be reasonable.

  3. In 2008, the Fortune 500 companies surpassed $10 trillion in revenue. If we assume 0.5 percent of their revenues went to legal costs (excluding fines, judgments and settlements), a benchmark percentage that is middle-of-the-pack, that means about $50 billion, of which roughly 60 percent typically goes to outside counsel — $30 billion (See my post of Oct. 12, 2008: estimate of legal spend by Fortune 500.). Many companies outside the Fortune 500 use external counsel, but surely these giants account for a large portion of US law firm fees.

  4. According to the Economist, Dec. 17, 2005 at 57, “about $250 billion is spent on legal services world-wide, about two-thirds of it in America.” That means about $165 billion in the US, but I do not know whether that figure includes the costs of inside lawyers (See my post of Jan. 10, 2006: reference to the $165 billion figure.). The same post mentions that according to BusinessWeek, Sept. 18, 2006 at 42, the total revenue of the US “legal services industry” amounts to $225 billion. The largest slice of that pie belongs to law firms, I am persuaded, so perhaps 80 percent is law firms: about $160 billion. Since consumer spending is about 3/4ths of our economy, is it reasonable to estimate that they account for the same proportion of legal fees paid law firms? No, but perhaps they account for half the fees? That would leave something like $90 billion for corporate spending on law firms.

I give up. I can’t reconcile these widely different estimations of what US legal departments spend on US law firms.

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