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How size of law department correlates to the average number of law firms retained

Let’s parse some data about the number of law firms employed by law departments as the departments increase in size. The data comes from 2004 and 2005 and is in the 2006 Altman Weil Law Department Metrics Benchmarking Survey, published in partnership with LexisNexis Martindale-Hubble and reproduced in InsideCounsel, Nov. 2006 at 106.

Combining the data for the two years, single lawyer departments retained an average of 8 firms; 2-3 lawyer departments retained 16 firms; 4-10 lawyer departments retained 48; 11-25 retained 98; and larger departments retained about 140. Hence, until 25 lawyers and very roughly, each time the in-house group doubles in size, the number of firms it retains also doubles.

This linear relationship is somewhat counter-intuitive, since you would think that a beefier in-house group would reduce the need to go outside. The explanation has to do with the legal complexity of larger companies and the demands for local counsel of far-flung litigation.