Demand for legal services is on the rise for California companies, a newly released survey finds.

The 2018 HBR Consulting Law Department Survey results showed that California legal departments are spending more, and looking to hire in-house more, than the average respondent worldwide. Out of 208 respondent companies, 30 were from California. More than a third of California companies were in the tech sector.

The average California company that responded had $11 billion in revenue, compared to a $9.5 billion average worldwide. California companies also had larger legal teams, an average of 49 versus 28.5, and higher legal spending, an average of $62.5 million versus $30.6 million.

“There are definitely regional differences in the types of companies that make up that region. So in California a lot of our participants that are contributing to the data are tech companies,” said HBR managing director Lauren Chung. She said the tech industry may have more legal activity than other spaces.

That spend could rise more next year. Seventy percent of California respondents said they expect their legal needs to increase in 2019.

All that increase won't just go to outside counsel, according to the survey. Nearly two-thirds said their legal team plans to increase the number of lawyers in-house. More than 40 percent said their department would increase use of current technology, and 29 percent said they planned to re-engineer work processes.

From 2016 to 2017, 43 percent of California respondents' legal departments grew, compared with 47 percent of worldwide respondents. And outside counsel will likely see business pick up as well, Chung said, just not as much as in the past.

“There is always going to be a place for outside counsel. The need and demand for outside counsel will continue. Outside counsel spending did increase 3 percent in California,” Chung said. “We're also seeing law departments that are thinking about alternative service providers, nontraditional law firms to help in certain areas of work that might be more routine that can go to a lower-cost provider.”

Nearly all companies reported they've taken measures to reduce outside counsel spending. In California, the most-used initiative to decrease outside spending was “more consistent use of planning and budgeting” at 94 percent, followed by alternative fee arrangements and “tougher enforcement of outside counsel billing guidelines.”

California legal teams were more likely to have a dedicated legal operations manager than the average respondent company. Nearly 80 percent of California teams reported having a legal ops professional, compared with 58 percent of worldwide participant companies.

“California really has been a front-runner in the whole legal operations space,” Chung said.

Companies in the Golden State also, perhaps unsurprisingly, had high implementation rates for legal tech. All California respondents said they use an e-billing system. Matter management systems were used by 88 percent of California respondents and 79 percent used e-signatures.

More than a third of California companies said they are considering implementing artificial intelligence in the next two years. One-third are looking into real-time technology to track legal spending, and 24 percent are considering contract management tools.

“There's a higher level of maturity among California companies when it comes to things like legal ops, when it comes to things like technology implementation,” Chung said. “Because what you're seeing here is the table stakes technology like e-billing and matter management—they got it. And when you look at what they're considering in the next one to two years, it's kind of that next level, next tier of technologies that others are starting to explore.”