Corporate Legal Departments’ Provider

Corporate Legal Departments’ Provider Spend Up, But Number of Providers Down: Outsourcing Trends

Here’s a report with some good news/bad news (if you’re a provider, that is). Corporate legal departments’ provider spend is up (yay!). But the number of providers per corporate legal department is down.

Those are some of the findings from the Wolters Kluwer ELM Solutions’ fifth LegalVIEW Insights Report, released earlier this week. While their latest report shows that corporate legal departments’ provider spend is up (average external legal spend grew by 36% in 2021, which is a significant rebound from 2020), it also shows that a typical corporate legal department was found to engage a median of close to 122 providers in 2021 – an 8.6% decrease from 2020.

“Law firms can grow revenue by expanding the number of clients they serve or increasing their average revenue per client,” said Nathan Cemenska, Director of Legal Operations and Industry Insights at Wolters Kluwer ELM Solutions. “Our findings show that unranked law firms lost clients but grew revenue by increasing the dollar size of the average client relationship.”

Additional highlights from the fifth LegalVIEW Insights report include:

  • The average vendor count at “small” or “medium” sized organizations also remains depressed. But CLDs based in large companies with more than $20 billion in revenue have continued to expand their use of providers since the pandemic, leveraging an average of 451 vendors in 2021 – up from 436 in 2020 and 433 in 2019, respectively.
  • Firms in the Am Law 1- 10 failed to retain the market share gains they captured in 2020, dropping from a 14.1% share to a 12.6% share. Small and unranked firms outside the Am Law 200 enjoyed a more favorable trajectory, expanding their share of external legal department spend from 44% to 47.5% over the last year.
  • Alternative legal service providers (ALSPs) continue to represent a small but potentially growing share of the market. However, that share is largely dominated by seven leading companies, with the industry’s remaining ALSPs accounting for only 4.7% of spend on alternative legal services.

You can get the FREE full report here. Then, you can decide if it’s good news or bad news! 😉

So, what do you think? Are you surprised that corporate legal departments’ provider spend is up? Or disappointed that the average number of providers is down? Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

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