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60% of organisations suffer ‘inefficient’ legal spend: Report

60% of organisations suffer ‘inefficient’ legal spend: Report

Scales of Justice

New research has found that the majority of large organisations around the world allocate their legal spend inefficiently.

Legal research firm Acritas produced the recent Patterns in Legal Spend Report – Part 2 using data from the 2016 Sharplegal Global Elite survey, which questioned over 2,000 senior in-house counsel around the world.

Their responses revealed a delicate balance between internal and external legal spending that delivers maximum efficiency.

According to the Acritas report, optimum efficiency is achieved when an organisation allocates between 40 per cent and 70 per cent of its legal spend internally.

However, 60 per cent of respondents sit outside this range, with the majority allocating less than 40 per cent internally.

However, Acritas CEO Lisa Hart Shepherd said it is important for organisations to understand their own contexts, rather than comparing themselves rigidly to worldwide averages.

“Globally, the average proportion of revenue allocated internally is 44 per cent,” she said.

“However, it’s rarely useful for organisations to benchmark themselves against global or even country averages as they are unlikely to be in line. Russian companies, for example, have far lower external spend and much bigger in-house teams. So it’s important to find a relevant peer group benchmark.

“We have seen the internal spend grow in recent years and it’s increased by 11 per cent since we first measured it in 2012.”

Acritas’ next Sharplegal survey will focus on remuneration for senior in-house counsel and law firm partners.

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