A questionable claim that more lawyers cuts outside spend in half, or that they are one-third the cost

“Corporate Executive Board research reveals that reducing legal staff can actually lead to considerable increased legal costs. Companies with fewer in-house lawyers tend to spend twice as much as their peers with more lawyers.” I suppose if a department is denuded, its client enterprise will pay more to outside counsel. But the vague use of “fewer” gives little guidance. The quote is from the Corporate Executive Board, April 10, 2009.

A second quote also troubled me. “The root of the problem is that contracted lawyers cost two to three times more than in-house lawyers, and companies invariably end up needing to use them for a variety of reasons, and usually on a very frequent basis. Legal work typically isn’t discretionary—try as they might, companies can’t avoid engaging a lawyer when a legal matter arises.”

The General Counsel Roundtable pays attention to its research, so I am surprised that it states that in-house lawyers cost one-third of what “contracted lawyers” cost. All the figures I have seen tell a different story. On a comparable hourly-cost basis, inside lawyers are in the $200 range and outside counsel are in the $300 range for effective rates, which is fifty percent more – far from 200 to 300 percent more.

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