Big Law Commands Big Rates
They span many industries, and there isn’t a significant
Kris Satkunas, director of strategic consulting at LexisNexis CounselLink, discusses the major takeaways from the most recent CounselLink Enterprise Legal Management Trends Report, including what we can learn from 2019’s data – and what we can’t.
CCBJ: Let’s start with a broad overview of the CounselLink Enterprise Legal Management Trends Report. What can you tell us about it – how it’s structured, the companies involved, etc.? Kris Satkunas: The analysis in the report is based on data that flows through CounselLink. CounselLink is both a matter management and an e-billing solution, meaning law firms collaborate with corporate customers about specific matters through CounselLink and also submit invoices for work related to those matters in CounselLink. A massive amount of data results from those processes, and that aggregate data provides valuable information for the industry when mined for trends. I do want to point out up front that we scrub the data of any identifying information and normalize and aggregate the data and put it into a separate database that contains no information that can identify the law firms, the clients they serve, the specific matters or the individual timekeepers. The database currently has records that represent about $35 billion in outside counsel spending. As far as the scope of the organizations, there are thousands of law firms that bill through CounselLink – all shapes and sizes from different geographic locations. The only law firm data that we use for the trends report, however, is U.S data. As for the corporations or other entities that are being billed, CounselLink’s market is broad. There are several hundred entities using our solution that range from small corporations to very large ones with billions in revenue.
concentration in specific industries. What are the top three trends that the report identified this year? Every year as I do the analysis for the report, I look for the few things that really stand out the most to me. I try to find the things that I think are going to be of the most value to our industry. This year, one relates to alternative fee arrangements (AFAs). And the key finding this year is actually something that we initially reported on last year. But let me back up for a moment and give a bit of context first. Historically, we’ve been producing the trends report since 2013. For the first five years, what we saw was that alternative fee arrangement usage hovered around 10 percent. In other words, 10 percent of matters had some sort of non-hourly billing arrangement. But last year when we did the analysis, we found that the number of AFAs had gone up to just over 12 percent. On the surface, that might not seem like a very big increase, but actually, to go from 10 percent to 12 percent after not really moving at all for years, we felt like that was significant – but I also thought that perhaps last year was just a one-time blip. This year, looking at the data from 2019, we saw that, once again, just over 12 percent of matters were being billed under some sort of AFA. So it feels like a trend has really begun, that finally, after years of talk about increasing the use of alternative fee arrangements, it really is happening. I think it’s exciting to see that the dial finally has moved. From our point of view, it’s a move in the right direction. There are so many benefits to AFAs, and corporate legal departments are starting to realize it as they start using more and more of them. They get much better predictability as far as what their expenses are going to be. And there is accountability because they’ve often already agreed on the pricing with their law firms. It helps them manage CORPORATE COUNSEL BUSINESS JOURNAL
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