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
Launching the Legal Value Network - Kristina Lambright and Purvi Sanghvi
Why Retention of Legal Talent Can't Be The Equivalent of a Coin Flip - Bryan Parker of Legal Innovators
Heidi Gardner and Brian Stearns: Remote Collaboration from Tools to Psychology
Let's Talk About Our Side Projects
Charlie Uniman - Failure is not the Ugly F-Word Lawyers Think It Is
A Chat About Chatbots and The Law With Katherine Lowry and Diego Alcala
What Should Law Firms Do To Prepare for a Possible COVID-19 Epidemic? With the ALA's April Campbell
The Innovative Concept of Legal Writing in Plain English
Nick Pryor and BCLP³'s Global Innovation Mission
Professor Steve Black on Cybersecurity in the Legal Market
Matt Sunbulli on Fishbowl's Entry into the Legal Industry Social Media Space
The Leadership Journey with Laura Toledo and Kevin Iredell
Ellyssa Valenti Kroski on Law Librarians in the Age of AI, and a Hamilton Escape Room
Professor Ben Barton on Fixing Law Schools
Deep Dive on State Copyright Issues with Kyle Courtney and Ed Walters
The AALL Animal Law Caucus: Acknowledging and Researching Animal Rights in a People-Centric World
Alyson Carrel and Cat Moon on The Delta Model
Hotshot's Ian Nelson on Modernizing Attorney Professional Development
Anne Tucker and Ben Chapman on Georgia State University's Law & Business School's Collaborate on The Institute for Insight
And the Survey Says... - Kevin Clem on the HBR Law Department Survey
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