Corporate legal teams are still largely not taking advantage of simple cost-saving measures that can reduce the heavy financial impact of ‘megamatters’, a new report from Wolters Kluwer finds.
In 56% of corporate legal departments (CLDs), the top 10 biggest legal matters account for between 20 percent to 40 percent of spend. But according to Wolters Kluwer ELM Solutions, which published the third in a series of four quarterly LegalVIEW Insights reports today (8 December), there are still a variety of simple cost-saving measures a department can implement in order to reduce the budgetary impact of these matters over the long-term.
Insights into CLD spend are sourced from ELM Solutions’ LegalVIEW database, in which invoices recently crossed the $150 billion threshold. The wide scope of that data bolsters ELM Solutions’ ability to continue identifying key trends.
Megamatters, or legal matters that accrue more than $1m USD in lifetime costs, account for much of the volatility found in corporate law firm spend. However, the ELM Solutions report indicates that some organizations are still not taking full advantage of technology and managed services that can help reduce spend. For example, the use of alternative legal service providers (ALSPs) can drive significant improvements in cost control. But the most recent LegalVIEW Insights report suggests that ALSPs have captured only 2.2% of megamatter work coming out of CLDs.
“There is always low-hanging fruit in every type of legal matter, and the scope of these matters means that the simple effort of picking the low-hanging fruit from a single matter could save millions,” said Nathan Cemenska, director of legal operations and industry insights for Wolters Kluwer ELM Solutions.
Additional highlights from the third LegalVIEW Insights report include:
- Megamatters are bellwethers for the trajectory of a department’s overall legal spend. If annual megamatter spend rises or falls by even $1 USD, there is an 89 percent chance that the direction of total outside counsel spend will follow accordingly. The connection between megamatter and total outside counsel spend necessitates ongoing communication between all stakeholders.
- CLDs that refuse to engage regional law firms on megamatters could be forfeiting significant cost savings in the form of reduced hourly rates. Unranked law firms outside of the Am Law 200, for instance, appear to be playing a central role in how some corporate legal departments are handling their megamatters. Together, unranked firms account for about 28 percent of megamatter spend, which remains less than the 40.3 percent of spend they capture in matters accruing less than $1 million USD in lifetime costs.
In conjunction with the LegalVIEW Insights reports, ELM Solutions is producing an ongoing series of LegalVIEW Insights blogs, webinars and other content discussing the emerging trends from the LegalVIEW Data Warehouse. Both reports and other associated materials are available on the LegalVIEW Insights landing page.