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A Gartner Inc. survey of 140 in-house legal departments found that the most cost-effective departments devoted almost twice as much of their budgets to training as their higher-cost peers.

The most cost-effective legal departments spent 2.04% of their in-house budget on training and development compared to higher-cost departments that spent only 1.04% on training. The researchers concluded that investing in training helped increase productivity while not increasing head count and led to a decrease in spending on expert or outside support.

The most cost-effective departments made efforts to continuously strengthen their in-house capabilities and invested more in lawyer training and development. They also assigned more work in-house and standardized work processes using tools and templates, the survey found. 

The 2018 Gartner State of the Legal Function survey examined features of cost-effective legal departments whose spending was in the lowest quartile of their peer group "while managing a similar volume and portfolio of work," to the higher-cost departments, the research group said in a news release.

The survey found that cost-effective departments also devoted nearly 8% more of their total budgets to in-house staff salaries, training, information technology systems and software compared with higher-cost departments.

Michael Mayfield, research director in Gartner's legal and compliance practice, said in a statement, "legal departments have a tendency to hand off complex work to outside counsel, but organizations can achieve significant cost savings by bringing this work in house."

The most cost-effective legal departments spent 54.9% of their legal budget in-house, compared to 47.2% for higher-cost department. 

Gartner found that 63% of in-house legal work is routine or can be standardized and that cost-effective legal departments "employ a high level of standardization" by creating self-service tools for business clients and using templates for routine matters.

Law firm expenses made up 93.5% of a legal department's outside spending, according to Gartner, a publicly traded research and advisory company. Cost-effective departments used outside counsel mainly for critical matters, while relying on alternative legal service providers and non-lawyer staff for less risky activities, the survey found.

Cost-effective legal departments spent more than 6% of outside dollars on alternative legal service providers, compared with the higher-cost legal departments, who spent less than 2% on alternative providers. 

Lower-cost legal departments used an average of 14 outside firms versus 31 for the higher-cost legal departments, which researchers said lowers the amount of resources needed to manage the outside law firms.

But James Wilber, a principal of Altman Weil Inc., a management consulting firm to legal organizations, said in an interview Thursday that while many legal matters can be handled internally, the matter of using outside firms is more complex.

"Certainly a lot of companies have lowered the number of outside firms they work with, and assigned to a smaller number of firms and asked for bigger discounts but just the number of firms isn't determinative," Wilber said. "Are they right for the work in question and are they working as a partner? It's a much more complicated set of topics than the survey draws pretty bold conclusions about."