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In response to pressure to be more efficient and in order to capitalize on legal department staff who have an intimate understanding of the business, companies are bringing more legal work in-house.

But does this attempt to keep more matters in the legal department translate to more cash staying inside than going to outside legal help?

A survey released this week by the Corporate Legal Operations Consortium (CLOC), a leading organization of corporate legal ops leaders, looks squarely at internal versus external spend, revealing that a large percentage of the legal budget still goes to external legal costs.

The study of 156 companies showed that 62 percent of legal costs go to external spend, with the remaining 38 percent staying internal. Put another way: Sixty-two cents of every $1 spent goes to external legal costs.

The breakdown surprised Sterling Miller, general counsel at marketing automation software company Marketo Inc., and former general counsel to Travelocity and Sabre Corp. “Our ratio is 25 cents out of every dollar goes to external,” said Miller, who currently leads a legal team of 14. “Even in my past jobs at Sabre and Travelocity, I don't think it ever got to 62 cents out of every dollar. At worst, I would see maybe 50/50.”

Jeff Franke, chief of staff to the general counsel and senior director of global legal operations at Yahoo Inc., agreed the numbers were unexpected, however, he cautioned that several factors could be at play. “The 38 percent strikes us as low,” said Franke, who is on the CLOC executive leadership team. “But you also have to look at these things in the context of what's going on within a corporation.”

If there's turmoil in the marketplace, for instance, or a company is experiencing a lot of litigation or more M&A activity than is typical, “then the numbers will be impacted,” Franke said.

For some, though, the numbers weren't all that surprising. It's true there's been a push in recent years to bring more work in-house, said Jason Winmill, managing partner at consulting firm Argopoint, which regularly advises legal departments at Fortune 500 companies. But he called it a “slow and much more challenging process” than one would imagine.

Winmill added: “Corporate legal budgets tend to be between 40 to 60 percent spent on the outside. The 62 [percent] is on the higher end of the range … but it's not a crazy number.”

While reactions to the breakdown vary, there does seem to be a consensus that there are plenty of ways for legal departments to have healthy external spend while still becoming more efficient. And this is, at least in part, because of the way the legal department model has changed.

“We know that the industry is in a period of flux, and the purchase of legal services is fundamentally changing,” said Connie Brenton, the chief of staff and director of legal operations at NetApp Inc, who also serves as CLOC chairman. “There are many more participants in the legal ecosystem now than there were several years ago. Outside counsel is only one component.”

NetApp, for instance, has 16 full-time employees outsourced to a managed services provider, Brenton said. While these employees are very much integrated into the legal department, “that really does count as outside spend,” she explained.

For Marketo's Miller, changes in the legal department model can be seen in the demand for alternative service providers. “This can be very efficient,” he said, “particularly if you have a small legal department and you don't want to hire someone … and you don't want to go to a big law firm, there's this niche that I think is growing that can meet those needs.”

The survey goes on to offer a breakdown in spend by industry. By far, the biotech, pharmaceutical and life sciences industries spend the most, both internally and externally. Biotech companies, per the survey, spend up to two times as much on total legal spend as tech companies and nearly five times as much as energy and manufacturing companies.

The results also reveal that the average internal spend per legal department full-time employee —which includes attorneys, paralegals, legal ops professionals and all others in the legal department—is $221,000.

If you generously assume someone in any given legal department is working 2,000 hours a year, which works out to less than 40 hours per week, that's just over $100 an hour, Franke pointed out. “Compare this to law firms, where you might be paying anywhere from over $400 an hour for a junior resource to over $1,000 for a senior resource,” he said. “You have to ask yourself: 'Why is it $110 for a very senior resource in-house, but that same resource is going to cost me 10 times that from a law firm?'”

According to Miller, bringing this kind of math to the table is one way to argue for increased legal department head count. “If you can demonstrate that to the CFO, you can expand the size of your legal department, even in the face of cost cutting going on in other places in the company,” he said.