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Wolters Kluwer ELM Solutions insights shows a wide range in law firm staffing ratios
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WK logoLaw 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.

That’s according to a new report from Wolters Kluwer ELM Solutions. 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. The database is one of the major client offerings of the US-based legal technology provider. 

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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,” said Cemenska in a statement. “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.”

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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. 
  • 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.
  • 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. 

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. 

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In related news, last week the company announced that Jeffrey Solomon, its Head of Managed Services and Analytics, has been featured on Bob Ambrogi’s widely followed LawNext podcast, discussing how corporate legal departments are using the power of data analytics to drive a more strategic approach to managing legal budgets and spend.

Much of the nearly 40-minute conversation is dedicated to the transformational insights being generated by ELM Solutions’ LegalVIEW database. Solomon explains how that legal spend data is leveraged by ELM Solutions products such as LegalVIEW BillAnalyzer and Predictive Insights to help law departments derive greater visibility around outside counsel spend, promote stronger adherence to billing guidelines, and select the best law firms for a given matter.

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.

 

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