After no change in total legal spending year over year between 2016 and 2017, law departments' total legal spending was up five percent last year, according to a new survey.

HBR Consulting's 2018 Law Department Survey, released today, indicates that the uptick in total legal spending correlates with increased legal needs.

The survey from the consultancy for legal organizations and corporations is in its 15th year and includes data from more than 250 participants. Respondents from the survey reported a median revenue of $9.5 billion for their companies, and the median total legal spend was $30.6 million.

In addition to total legal spending, median legal spend both internally and via outside counsel was up by three percent this year.

Given “the overall increase in legal work, law departments have to invest more in their legal-services delivery, whether it's internally or getting external resources to support the volume,” said Lauren Chung, HBR Consulting's managing director and the editor of the survey.

A large majority, 81 percent, of departments reported an expectation that their legal needs will continue to increase in the next year, citing commercial contracts, regulatory compliance and mergers and acquisitions as the top practices areas likely to require legal attention next year.

Thirty-four percent of departments reported to have increased their total number of lawyers, and a majority, 52 percent, reported an increase in total legal staff, including nonlawyers—a figure that is up from last year's 44 percent.

Forty percent of departments expect attorney staffing to increase next year, up from 31 percent last year.

Law departments “continue to be conscientious of cost while not sacrificing quality or effective service delivery,” Chung said.

“Cost control and cost management” continues to be one of law departments' greatest challenges, as reported by 60 percent of them. The most commonly cited tactics for handling increased legal work are boosting the workload of existing resources (41 percent) and expanding the use of current technology (37 percent).

For example, nearly one-fourth, 24 percent, of departments reported plans to move to or explore new matter management and e-billing systems within the next 12 months. This is on top of the 80 percent of departments reporting that they already have such systems in place—an all-time high for the survey.

In addition, contract management systems, AI technology and legal spend analytics also are on the horizon for some departments, with 29 percent, 28 percent and 26 percent of department respondents planning to implement the measures, respectively, in the next couple of years.