If your external spend is high, consider actions other than outside counsel management

A post on LDO Buzz back in April reprinted an article originally published in InsideCounsel. They article covers the usual points regarding what benchmark data to consider, what drives those metrics, and some steps to take to address problems. Nothing new, nothing objectionable.

One line, however, missed a key point: “High outside counsel spending as a percent of revenues compared to peers and/or increasing spending levels over time indicates (sic) the need to more effectively manage outside counsel.”

True, if your outside counsel spend has run at 0.25 percent of revenue for several years (or is increasing) while your industry’s median is 0.20 percent, you should take a look at how you use outside counsel. But, you might also look at whether your internal staff is adequate, because with too few lawyers, paralegals or other support staff your department might resort to external counsel more than would be necessary with the right talent. Further, you might look at how clients use the law department, since if they ask for services that consume too much time or inappropriate services, there will be more need for outside counsel.

The point is that if benchmarks on external spending deserve attention, outside counsel management is only one of several directions to evaluate.