Estimates of 60 percent spent on litigation by US legal departments may be too high

The Annual Report & Accounts of Juridica Investments Ltd., a publicly-traded company that finances litigation, cites data from the American Lawyer survey in 2008 of the 200 largest law firms in the US. The group of firms earned aggregate revenues of $81.5 billion. Further, says the Report, “Applying percentages from a survey of litigation revenue for this group conducted by The Lawyer magazine in 2007, total litigation revenues for these top firms were estimated to be in excess of $33 billion during 2008.”

Hence, litigation accounts for about 40 percent of the large firms’ total fees (40% of $81B). If true, the estimates I have commonly seen and written about regarding 60 percent of outside counsel spend by corporations going to litigation may be too high. These two data suggest that 40 percent may be closer to the mark (See my post of March 27, 2009: breakdown of in-house lawyers by practice area.). We need to consider, however, that the aggregate revenue of these firms comes from companies as well as from individuals. The spend from companies may skew more toward litigation than does the spend from individuals.