Ten dollars on law firms for every dollar spent externally other than on law firms

The ALM benchmark survey in 2011 gathered data that broke down participants’ external spend. Some thirty departments gave figures for their outside counsel spend as well as for their external spend other than outside counsel, such as expert witnesses, patent maintenance and filing fees, directors’ costs, etc. The median ratio between those two figures came out as $10 spent on law firms for every dollar spent on other external expenses. Stated differently, about 90% of external spend for those U.S. legal departments goes to law firms.

That seems a useful benchmark, except a general counsel can influence it. A law department that pays some large disbursements directly will appear quite different than another department that pays the law firm and includes the disbursements in the firm’s invoice. Some spending can be internal or external depending on the choice of payment process. That variability admitted, the 10-to-1 ratio sounds about right.