The average in-house legal department in Australia and New Zealand spends more than A$1m annually on external legal services, according to the Legal Department Benchmarking Report 2010.
The Australian Corporate Lawyers Association (ACLA) and Corporate Lawyers Association of New Zealand (CLANZ) report involved 160 organisations with a combined spend of A$1.6bn annually on legal services. Of those, more than three-quarters reported a legal spend of more than A$1m annually. Only a third of New Zealand respondents reported a legal spend of less than NZ$400,000 per annum, while 47% reported a legal spend of more than NZ$1m per annum. In Australia, a little over a third reported spending less than A$600,000 and about the same reported spending more than A$5m. The median spend was NZ$700,000 in New Zealand and A$1.5m in Australia.
However, Catalyst Consulting director Richard Stock, who helped co-ordinate the report said any money spent on outside legal services is almost double to what would be spent if those services were completed in-house. “The cost per-hour of a senior lawyer working in a legal dept is about 45cents to the dollar when buying the same thing externally,” he said.
In Australia, the median internal direct legal spend, including staff and other costs, was A$1.55m. In New Zealand, the equivalent figure was NZ$800,000. More than 60% of the Australian respondents reported spending more than A$1m while 21% reported spending more than A$5m.
Stock said legal departments could decrease their external spend by planning more accurately what their legal needs would be over two or three years and then making a commitment to the law firms that they use or hiring appropriate staff. “The client has to be better at forecasting legal requirements, two or three years out- almost none of them can do that well. You never know specifically, but you should predict on the average over the next few years,” he said.
See ALB next week for further details from the report.
Budgets for external legal spend on the rise 6 May 2010
Federal government to copy private sector in legal procurement 12 January 2010