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16% of firms account for 80%+ of outside counsel spending, but an odd conclusion (UPS)

The UPS legal department, with about 40 lawyers worldwide, spends nearly 95 percent of its annual spend on outside counsel fees, as noted in InsideCounsel, April 2006 at 77. UPS employs up to 150 law firms globally each year, but “25 core law firms represent more than 80 percent of its costs.” (See my post of March 24, 2005 on concentration of spending.).

Based on published benchmarks of approximately $350,000 per attorney for the inside budget, that would leave an inside budget somewhere in the range of $14 million (40 times $350K), which is 5 percent of $280 million. If 25 firms garner 80 percent of $266 million, that’s a mouth-watering $8 million or so per firm!! Talk about partnering!