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Infrequent use of foreign law firms (excluding IP) by US law departments

A study conducted by ALM in May of 2006 (released in the Spring of 2007) looks at how US companies select international outside counsel. The study gathered survey responses from 219 senior lawyers and many of them participated in interviews six months later. Somewhat over half of the companies had revenues in excess of $1 billion but a quarter of them had revenue of less than $100 million. This mix of large and small companies makes a difference because the smaller the company the less likely it is to need overseas counsel.

One chart (pg. 6) shows that 42 percent of the respondents had fewer than five matters that required hiring outside counsel in another country in the past 12 months. Another 29 percent hired outside counsel for five and 10 matters in the past 12 months.

The survey indicates later that 67 percent of the matters involved patent or trademark issues so the results overstate the demand for international law firms to handle significant litigation or transactional matters. Many patent and trademark retentions are required by national laws, but the firm does relatively little substantive legal work. With that caveat, the data suggest to me that the need to find a firm oversees is for most US law departments very infrequent.

These law departments may be using one US law firms with offices in a foreign country to meet their needs (See my post of Jan. 3, 2007 about US firms with branch offices in France.).