Law Department Management Blog
A benchmark that shows up from surveys of law departments is the external spending per in-house lawyer. According to this year’s General Counsel Metrics benchmark survey, for more than 400 departments in the United States, that figure runs around $500,000 per attorney. Stated differently, for the median department, if each lawyer were equally responsible for managing outside counsel, they would be approving about $10,000 of invoices each week. (Just stating that colossal amount belies claims of effective bill review.).
Several factors influence spending per lawyer for any specific legal department. The most significant is the number of in-house counsel. If the department is “lawyer heavy” it will have a lower figure, since it has relatively more lawyers than peers. Ironically, more lawyers on staff may lead to them generating more need for outside counsel.
The figure also depends on the industry of the department, since industries differ considerably in the intensity of litigation faced by their members. Litigation accounts for the largest share of external spend, but not all of it.
Also, the general expectation is that a capable matter management system will help to moderate or reduce the figure, all other things being equal. Likewise, measures aimed at external cost control should bring it down, such as fixed-fee arrangements or panels.
The benchmark of external spending per lawyer should not relate to the number of law firms managed by a lawyer. If anything, the more firms retained, the lower the figure if the firms are better matched by their cost to the importance of matters.