It’s trends day!  Wolters Kluwer has been issuing quarterly reports called LegalVIEW Insights reports and their Q3 report was just released last week. It suggests that changes in the number and size of very large legal matters (greater than $1M in lifetime spend) – referred to by them as “megamatters” – drive a lot of the volatility seen in total outside spend.

The report (LegalVIEW^® Insights Volume 3: The Effect of Very Large Legal Matters on Outside Legal Costs, written by Nathan Cemenska) capitalizes on the previous Q2 LegalVIEW Insights report, which showed that outside spend in corporate law departments is fairly volatile, with 29% of corporate legal departments (CLDs) experiencing a 90% swing up or down over a five-year period, and many of the rest experiencing a lesser—but still significant—amount of volatility. This report follows up on that research by asking the questions: Why, where, and what? Why does legal spend go up and down so much, and where is that volatility coming from? Just as importantly, what can corporate law departments do differently based on the answers to the prior two questions?

The answers to those questions seem to be tied up in the changes in the number and size of the megamatters. Trends to consider include:

• In the typical corporate law department, matters with over $1M in lifetime spend account for about 61% of total outside counsel spend in any given year.
• Total outside counsel spend is extremely sensitive to changes in megamatter spend. For instance, if total spend on matters greater than $1M in lifetime spend goes up by even $1 in a given year, that creates an 89% chance that total spend overall will go up as well. Thus, changes in total legal spend tend to be driven by megamatters more so than other matters.
• Over a six-year period, over one-third of CLDs will spend double on megamatters in a “bad year” compared to what they will spend on them in a “good year.” Almost 9% of organizations will spend six times more in a bad year than in a good.

The 12-page PDF report includes seven “insights” and (along with the Q1 and Q2 reports) is available for download here. I found it – insightful! See what I did there? 😉

So, what do you think? Does your organization have any megamatters to manage? If so, do you agree that megamatters “matter” that much? Please share any comments you might have or if you’d like to know more about a particular topic.

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