Assertion that average legal department cut nearly 17 percent of their law firms in 2009

An article by the president of BTI Consulting, published in Strategies, Vol. 11, Sept. 2009 at 6, asserts that “the average company cut nine law firms – nearly 17 percent – from its current roster of legal service providers in 2009.” That means that the average fell from about 55 law firms to 46. A chart that accompanies the article confirms that that “number of law firms used” dropped during 2008-2009 dropped from two “primary” firms, 10 “secondary” firms, and 42 “all others” (total of 54) down to two primary, 9 secondary, and 34 all other (total of 45, a reduction of 9). I estimated the secondary and other figures.

Why didn’t the article explain what it means by “cut”? The term sounds deliberate, as if a firm had performed poorly. If a law department stops using a law firm, could it sometimes mean that the law firm completed the case or matter or merged with another firm?

What proportion of the legal department’s spend went to the law firms that were “cut”? If the typical law firm that was “cut” received $5,000 or less from a legal department, the sentence packs less of a punch than if the typical amount was multiples.

Third, how did BTI compute the nine and the percentage? Did BTI get from each law department the number of law firms it used in 2008 by the categories of primary, secondary, and other and the equivalent number used midway through 2009, subtract the one figure from the other, and then average all those results? If so, a median would have been better, since a few large departments that slashed rosters would skew the average higher. And, if so, what happened during the rest of 2009?

As a fourth question, what are the characteristics of the population of legal departments from which the findings are made? Later on, the article cites “five new client priorities” that are “based on interviews with more than 500 large clients and 270 mid-size clients.” If 770 or more legal departments actually lopped off a net of nine law firms each during the first portion of this year, the carnage was immense.

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