Doubts about survey data on the typical number of US law firms retained by law departments of various sizes

The ACC Docket, April 2011 at 14, states a finding from the 2010 Managing Outside Counsel Survey: “The median number of US law firms used by law departments during 2009 was 12.” A dozen seems too low. If a law departments has a couple of law suits during the year, a firm to review issues in each of a handful of specialty areas, local counsel, etc. it is be easy to hire more than a dozen, so to find that half of the companies in the survey use fewer needs some backup.

The summary offers one sentence more. “The average number of US law firms used by small law departments (2 or fewer lawyers) was five firms; medium law departments (3-10 lawyers) was 12 firms; and large law departments (more than 10 lawyers) was 60 firms.”

When the finding one year for large departments was 20 firms, I challenged it as too low (See my post of April 18, 2009: 2009 Serengeti survey gave 20 law firms.). This fuller set of data does not seem right to me either. The average of 12 means there had to have been mostly smallish law departments in the survey. Or perhaps if a department did not give a number the analysts treated it as zero firms? Did the phrasing of the question lead to an undercount?

It is plausible, but untested empirically, that with increasing size, law departments use fewer law firms per unit of revenue. Absolute numbers of firms, of course, will climb. After all, bigger departments have in-house lawyers who can take on more legal issues, unlike their 1, 2, and 3 lawyer counterparts who deal with a broad spectrum of issues but lack depth in many areas. It follows that they would turn to outside counsel relatively more frequently, although the number of law firms they hire might not grow proportionally.

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