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Very low number of law firms instructed by the FTSE 100

Legal Week Intelligence collected data from 317 UK companies, including 54 from the FTSE 100. “The average number of law firms used by the FTSE companies increased from eight to nine since 2003.” This surprising finding comes from Corp. Counsel, Vol. 16, April 2009 at 66. The number of law firms retained on the other side of the Atlantic is much higher (See my post of April 18, 2009: perhaps 50+ for departments the size of FTSE companies.).

The smallest three companies on the FTSE 100, which is an index defined by market capitalization, are approximately $1 billion, $6 billion and $10 billion in revenue, so all these companies are very large. Why are they not averaging well more than the reported nine external counsel? A possible explanation is that UK companies are more likely to narrow down to panels of law firms (See my post of June 18, 2007: law-firm panels with 13 references.). Since that metapost, more items here have discussed panels (See my post of Feb. 21, 2008: panel selection; Aug. 13, 2008: 8 tips on a panel review; July 27, 2008 #3: secondees expected from panel firms; Aug. 18, 2008: BT panel practices; Dec. 9, 2008: Abu Dhabi Commercial Bank’s panels; and April 2, 2009: HSBC’s panels.).

Even if panels reduce the number of firms used, less than ten on average for such large companies is strikingly low, considering that their total outside counsel spend is likely to be in the multiple millions.