Many companies do business with legal departments. Think of software licensors, consultants (as Chair of the Association of Consultants to Law Departments I found more than 100 law department consultants), jury research firms, legal researchers, compliance program vendors, copy services, deposition transcript companies, equipment manufacturers and lessors, stationers, and endlessly more.
My ruminations, however, have to do with the number of those vendors and their revenue that comes directly from law departments. I added “directly” because law departments are certainly paying many of these vendors as disbursements or pass-through from law firms. About ten percent of a typical law firm invoice goes to expenses.
Might law departments spend on the cottage industries five percent of what they pay law firms? If so, a ten lawyer department, spending 60 percent of its total budget on law firms, would spend on the order of $5 million on outside counsel, of which 5 percent to the cottage firms would be $250,000.