Knowledge of how staffing ratios vary by Am Law tier or matter type can help legal departments drive cost savings.
According to a new report from Wolters Kluwer ELM Solutions, law firm partner utilization in the “average” corporate legal department (CLD) stood at 38% in 2021, barely receding from the 7-year high reached in 2020 while less costly paralegal time represents just 1.5% to 2.5% of the dollar amount found on outside counsel invoices. The study is the fourth in a series of ongoing LegalVIEW Insights reports sourced from ELM Solutions’ LegalVIEW database, the most comprehensive legal spend database in the world at more than $150 billion in legal invoices.
An analysis by Nathan Cemenska, Director of Legal Operations and Industry Insights for Wolters Kluwer ELM Solutions, indicates that while staffing numbers are relatively stable at a market level, they vary greatly among individual CLDs. The most common scenario finds that between 45% and 50% of law firm hours are billed by partners, while 25% to 30% stem from associates – but understanding the unique staffing ratios deployed by their own outside counsel will enable in-house legal teams to allocate work more strategically.
“It is important for buyers of legal services to understand the staffing patterns of their providers,” says Cemenska. “Law departments can utilize legal spend management solutions to determine the most beneficial staffing ratios for their top 10 or 20 legal matters and ensure that providers comply.”
Additional highlights from the fourth LegalVIEW Insights report include:
- Only 6% of CLDs demonstrate “very heavy partner utilization,” whereby 50% or more of all law firm hours are billed by partners. Conversely, another 6% of CLDs show “very low partner utilization” with partners responsible for billing only 5% of hours or fewer.
- The type of legal matter at stake can also impact staffing ratios. For example, paralegals account for 23% of all hours billed in general liability litigation, but represent only 4% of hours billed in environmental litigation.
- Staffing ratios vary greatly across Am Law tiers. The Am Law 10, for instance, typically generate fewer partner hours as a percentage of overall billings. However, 67% of Am Law 151- 200 firms generate the majority of their hours through partners.
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. Last year, ELM Solutions released the first three installments in its LegalVIEW Insights report series. Each report and other associated materials are available on the LegalVIEW Insights landing page.
ELM Solutions, part of Wolters Kluwer’s Governance, Risk & Compliance (GRC) division, is the market-leading global provider of enterprise legal spend and matter management, contract lifecycle management and legal analytics solutions. The company provides a comprehensive suite of tools that address the growing needs of corporate legal operations departments to increase operational efficiency and reduce costs. Corporate legal and insurance claims departments trust its innovative technology and end-to-end customer experience to drive world-class business outcomes. The other legal solutions business of Wolters Kluwer GRC is CT Corporation.
Wolters Kluwer ELM Solutions was named a leader in both the IDC MarketScape: Worldwide Enterprise Legal Spend Management 2020 Vendor Assessment and IDC MarketScape: Worldwide Enterprise Matter Management 2020 Vendor Assessment. The company’s award-winning products include Passport®, one of the highest rated ELM solutions in the latest Hyperion MarketView™ Legal Market Intelligence Report and TyMetrix® 360°, the industry’s leading SaaS-based e-billing and matter management solution. CLM Matrix, meanwhile, was named a “strong performer” in The Forrester Wave™: Contract Lifecycle Management For All Contracts, Q1 2021 report. ELM Solutions’ LegalVIEW® portfolio of legal analytics solutions is based upon the industry’s largest and most comprehensive legal spend database, with more than $150 billion in invoices.
Governance, Risk & Compliance is a division of Wolters Kluwer, which provides legal and banking professionals with solutions to help ensure compliance with ever-changing regulatory and legal obligations, manage risk, increase efficiency, and produce better business outcomes. GRC offers a portfolio of technology-enabled expert services and solutions focused on legal entity compliance, legal operations management, banking product compliance, and banking regulatory compliance.
Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the healthcare; tax and accounting; governance, risk and compliance; and legal and regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2021 annual revenues of €4.8 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 19,800 people worldwide. The company is headquartered in Alphen aan den Rijn, the Netherlands.