Our guest this week is Kristina Satkunas, Director of Analytic Consulting at LexisNexis. Kristina discusses the recently released LexisNexis CounselLink Enterprise Legal Management Trends Report for 2023. This annual report provides insights and benchmarks on key metrics related to corporate legal spending and outside counsel relationships.
The 2023 report found that law firm hourly rates increased 4.5% over the past year, the highest year-over-year increase in the 10 years LexisNexis has published the report. While rate increases are not surprising, the magnitude is noteworthy. Kris attributes the largest drivers of the increase to economic factors like inflation as well as lower demand for certain types of legal work. However, average blended rates (the rates charged for entire matters rather than individual timekeepers) remained relatively flat. This suggests in-house counsel are mitigating rate hikes by changing the mix of firms, timekeepers, and types of timekeepers working their matters.
The report also found the ongoing trend of consolidation to fewer outside firms continues, with 61% of companies using 10 or fewer firms for 80% of their legal spending. Kristina expects this trend to remain relatively stable but notes there are benefits to using both a smaller number of firms (e.g. better rates, stronger relationships) and a larger number of firms (e.g. subject matter expertise, competitive rates). She recommends companies determine when to use large firms versus smaller or midsize firms based on factors like matter complexity, risk profile, and cost.
Alternative fee arrangements (AFAs) have not gained significant traction according to the report, remaining at about 12% of matters. Kristina is an advocate for wider AFA adoption and believes companies need to ask for and consider AFA proposals, especially for appropriate matters. AFAs can help buffer rising hourly rates. She acknowledges AFAs require effort to evaluate and implement but thinks legal operations teams and outside counsel should work together using data and analytics to develop reasonable AFA proposals.
The report provides new data on international lawyer rates in 22 countries. Rates differ significantly between countries based on factors like a country's economy, political stability, and role in global trade and commerce. Many companies are leveraging international firms for regulatory, litigation, IP, and other legal needs outside the U.S. Benchmark data on rates in different countries provides helpful context, especially when engaging firms in new countries.
Kristina sees two significant changes on the horizon:
When asked what metric in-house and outside counsel should focus on, Kristina recommends using available data, whether from the survey or a company's own systems. Data is a "two-way street" that should be shared collaboratively to improve decision making.
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Transcript
Artificial Lawyer's Richard Tromans: Back to Work!
2024 Trends Report: Dynamics Shaping the Future of Legal w/CounselLink's Kris Satkunas
Jorn Vanysacker & Jeroen Thierens from Henchman: We Are Building the "Chief of Staff" For Each Legal Professional
Vlex Pushes Legal Tech Boundaries with New Features and Top Talent
Bloomberg Law Acquires Dashboard Legal to Enhance Legal Workflow Solutions - Joe Breda and Mat Rotenberg
Exploring the Intersection of Generative AI and Cybersecurity at ILTA EVOLVE - Ken Jones and Josh Smith
Love and Legal Tech: Karen Dunn Skinner and David Skinner of Gimbal Consulting
Love and Legal Tech - Kate Boyd and Ryan McClead of Sente Advisors
Kelly Griswold of Onna on the Fundamental Investments Needed in Data Management
Love and Legal Tech - Jillian Bommarito and Michael Bommarito of 273 Ventures
LegalWeek 2024 Special Part Five - Dan Lear from LegalTrack
Love and Legal Tech - Chris Ford and Nikki Shaver of Legal Technology Hub
Pablo Arredondo on the One-Year Anniversary of CoCounsel
Love and Legal Tech: Ab and Priti Saraswat
LegalWeek 2024 Special Part Four: Joshua Lenon from Clio
Love and Legal Tech: Sonja Ebron and Debra Slone of Courtroom5
LegalWeek 2024 Special Part Three: Bill Piwonka of Exterro
Love & Legal Tech: Cassie Vertovec and Alex Macdonald
LegalWeek 2024 Special Part Two: Mollie Nichols and Mark Noel from Redgrave Data
Legal Week 2024 Special Part One: Joey Seeber of Level Legal
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