CLOC 2019 State of The Industry FINAL

2019 STATE OF THE
INDUSTRY SURVEY
Results and Analysis
2019 All Rights Reserved Corporate Legal Operations Consortium

2019 STATE OF THE INDUSTRY
SURVEY RESULTS
The 2019 CLOC State of the Industry survey included respondents from over
200 companies of different sizes representing over 30 industries and 18
countries. According to the survey, corporate legal departments experienced
growth in demand for legal services and continued to focus on various means
to control costs. Many grew their legal operations teams and continued to
invest in technology.
213 Companies Responded

Participant Companies by Industry 12% of the Fortune 500
18 Countries
Government 1% 30 States
Non-Profit 1%
Entertainment, Media 2%
32+ Industries
Education 3%
Biotech, Pharmaceuticals, Life Sciences 3%
Retail 3%
Insrance 5%
Energy, Oil, Gas, Utility 6%
Health Care 7%
Consumer Goods / Manufacturing 12%
Other 13%
Financial Services 16%
Technology 28%
Table of Contents
Quick Stats……………………………........ 3 Technology & Innovation……….. 16
Overall Legal expenditure………....... 6 Law Firm Evaluations……………… 22
Legal Department Headcount......... 10 Member Topics & Interests….... 25
2 2019 All Rights Reserved Corporate Legal Operations Consortium

QUICK STATISTICS
Company Breakdown by Revenue

Company Revenue
$3.9T Collective Revenue

$4.5B Median Revenue
External Expenditure
$6.3B Collective External Expenditure

$11.7M Median External Expenditure
Company Size
Large > $10B
37%
Small < $1B

36%
27%
Medium $1B - $9.9B

INTERNAL &
EXTERNAL
EXPENDITURES

4
INTERNAL AND EXTERNAL EXPENDITURE
Overall External Expenditure

The sum of all external expenditure submitted by respondents totaled over
$6.3B for the over 200 companies who participated in CLOC’s survey. Over
50% of respondents reported that their external expenditure on law firms
either decreased or stayed the same from 2017 to 2018.
External Expenditure Range by Respondent
$500M - $999.9M 0.6%

$250M - $499M 3%
$100M - $249M 7%
$50M - $99.9M 12%
$25M - $49.9M 10%
$10M - $24.9M 23%
$5M - $9.9M 14%
$1M - $.4.9M 22%
<1M 7.1%
0% 5% 10% 15% 20% 25%
Median Internal Expenditure

per Legal Department FTE* $290K
Median External Legal Expenditure
per In-House Attorney $451K
*Legal department FTEs include attorneys, paralegals, Legal Operations professionals, administrators, and all other members of
the legal department.

Legal Expenditure Metrics

50% of respondents reported an increase in internal legal expenditure from
2017 to 2018 which is consistent with the trend of cost controls and growing
internal department sizes.
While 43% of respondents reported that the balance between in-house and
outside counsel spending stayed the same from 2017 to 2018, 22% reported
moving more work to outside counsel, 14% reported moving more work to
alternative legal service providers and 33% reported moving more work in
house.
External
46¢ of every $1 spent on legal

costs goes to external legal costs
46%
54%
Internal
Median External Legal

Expenditure
$11.7M
Median Internal Legal

Expenditure
$13.5M

Expenditure Breakdown by
Company Size
Participants in the 2019 CLOC State of the Industry Survey represented
companies of all sizes fairly evenly.
Mid-Size
Companies Small Companies
Large Companies ($1B - $9.9B (Less than $1B
($10B+ Revenue) Revenue) Revenue)
% of Respondents 35% 36% 29%
Avg. External
$84M $21M $4M
Expenditure
Avg. Internal
$91M $17M $5M
Expenditure
Avg. Legal
Expenditure as a % .5% 1% 2.7%
of Revenue
Avg. External to
$.92 External for $1.24 External for $.82 External for
Internal Expenditure
Every $1 In-House Every $1 In-House Every $1 In-House
Ratio

Expenditure Breakdown by
Industry
The average total legal spend as a percentage of revenues is 0.44%.
Companies reported using a number of techniques to control their overall
costs including leveraging alternative fee arrangements (AFAs), preferred
provider panels, alternative legal service providers, and moving more work
in house.
0.44% -24%
is the average spend as a % of company revenue
Average decrease in
external spend for large
55% & medium size
companies from 2018
of respondents use AFAs to lower external costs
Technology industry spends the most on internal resources, about 28% more than
external legal costs.
Internal External % of Revenue

$200,000,000 1.20%
1.10%
$180,000,000
Total Legal Spend
$160,000,000 0.90% 1.00%

0.80% % of Revenue
$140,000,000 0.70% 0.80%
$120,000,000
$100,000,000 0.50% 0.50% 0.60%
$80,000,000 0.40%
0.30% 0.40%
$60,000,000 0.20%0.20%
$40,000,000 0.10% 0.20%
$20,000,000
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LEGAL DEPARTMENT
HEADCOUNT

9
LEGAL DEPARTMENT HEADCOUNT
Overall Legal Department Headcount

19
Average small company (<$1B) legal department headcount
51
Average mid-size company ($1B - $9.9B) legal
department headcount
306
Average large company ($10B+) legal department headcount
Average Legal Department Headcount (FTE) by Industry*

360
250
188 179 174
127 120
88 71 68
37 32 30 11 11
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*Legal department FTEs include attorneys, paralegals, Legal Operations professionals, administrators, and all other members of the
legal department

Legal Operations Titles & Org Structure

The role of Legal Operations has grown in prevalence, scope and stature in
recent years with the majority of Legal Operations Leaders reporting directly
to the General Counsel and with titles of increasing seniority.
Titles of Legal Operations Leader*

Deputy General Counsel 2%
Associate General Counsel 2%
Legal Operations Senior Manager 3%
Head of Legal Operations 3%
General Counsel 5%
Senior Director of Legal Operations 6%
Vice President 8%
Director of Legal Operations 18%
Legal Operations Manager 20%
Other 32%
0% 5% 10% 15% 20% 25% 30% 35%
Legal Operations Reports To

SVP 1%
CFO 2%
VP 2%
Director 3%
Other 4%
CEO 4%
Deputy or Associate General Counsel 21%
General Counsel/Chief Legal Officer 65%
0% 10% 20% 30% 40% 50% 60% 70%
*Other legal operations leader titles included: Assistant General Counsel, Chief of Staff, Contracts & Legal Operations Manager, Chief
Operations Officer, and Head of Legal

Legal Operations Headcount

The size of Legal Operations functions has continued The average Legal
to increase through a combination of FTEs and Operations team has
contractors as teams demonstrate more impact. 6 FTEs
Insurance companies, which have the largest legal spend, have an average of 24
Legal Operations FTEs
Large size companies have an average of 14 Legal Operations FTEs & 2 Legal
Operations Contractors
Small and mid-size companies have an average of 2 Legal Operations FTEs & 0
Legal Operations Contractors
Average Legal Operations & Legal Operations Contractor by Industry
Biotech /Pharma/Life
Consumer Goods/Manufacturing 39%
Education of respondents said the size of
Energy/Oil & Gas/Utility their FTE legal operations team
Entertainment/Media has increased in 2018
Financial Services
Government
Health Care
Insurance
Non-Profit
Other
Retail
Technology
Transportation
0 5 10 15 20 25 30
# of Legal Ops # of Legal Operations Contractors

Legal Department: Legal Operations

Headcount Ratio
Legal Operations professionals are accounting
for a larger portion of their departments as the
22 The average Legal
Operations FTE
function grows in scope and new roles are Supports 22 Legal
Department Staff
added.
Number of Legal Dept Staff per Legal Operations FTE by Industry

60
Attorneys Other Legal
50
40
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12-to-1
Average large company ($10B+) attorney to legal operations ratio
13-to-1
Average mid-size company ($1B-$9.9B) attorney to legal operations ratio
6-to-1
Average small company (<$1B) attorney to legal operations ratio

Headcount Breakdown by Company

Size
Of the companies that participated, 41% reported an increase in full time
attorney headcount in 2018 and 39% reported an increase in dedicated
legal operations FTEs.
Mid-Size
Large Companies Companies Small Companies
Avg. Attorney
Headcount 164 28 10
Avg. Legal
Operations
Headcount 14 2 2
Avg. Attorney to (1) Attorney per (1) Attorney per (1) Attorney per
Revenue Ratio $293M $139M $36M
Avg. Internal Spend

$319K per FTE $341K per FTE $260K per FTE
per Legal Dept. FTE*
*Legal department FTEs include attorneys, paralegals, Legal Operations professionals, administrators, and all other members of the legal
department

TECHNOLOGY &
INNOVATION

15
TECHNOLOGY & INNOVATION
Use of Technology Solutions Roadmap

Legal Operations functions continue to have Companies with a
a strong focus on technology to improve developed technology
transparency and data analytics, efficiency, roadmap spend
quality and consistency of work, and speed 3x more on technology than
of execution. organizations that don’t have a
roadmap or those still developing
a roadmap
72% of respondents reported having a technology roadmap
% of Respondents with Implemented Systems & Tools
78%
65%
56% 54% 53%
52%
46% 46% 43%
41% 39%
32% 32% 29%
28% 27%
23% 22% 21%
9%
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In-House Engineers & Technology

Spend
The majority of corporate legal departments do not have in-house
engineering support. Regardless, most companies rely on third party
technology solutions for their legal department needs and adoption of legal
technology is increasing in companies of all sizes and industries.
of large size companies that do not have in-house engineering teams spent an
30% average of $977K on legal technology
35% of respondents have dedicated in-house engineering resources
37% of companies spent more than $750K on legal technology in 2018
Average legal technology spend for mid-size companies with in-house

$1M engineering resources in 2018

Most Commonly Used Technology

eBilling / Matter Solutions
78% of respondents use an eBilling system
5 eBilling vendors account for 60% of the market share among

respondents with an eBilling system
Top Solutions Named Included
• LexisNexis CounselLink • Thomson Reuters Legal Tracker

• Mitratech Collaborati / TeamConnect • TyMetrix 360
• SimpleLegal
Contracts Management
65% of respondents use a contract management system
The contracts management market is quite fragmented with 30+ different

vendors being used among the 112 companies with a system
Top Solutions Named Included
• Apttus • Office 365
• iCertis • SAP Ariba
• Ironclad • SpringCM
• Home Grown/Internally Developed

Exploring the Use of Artificial

Intelligence
While the use of artificial intelligence in
legal departments is still in early stages,
many see its promise and are already
starting to explore how best to leverage it.
are exploring use of AI to reduce legal workload, gain more insight, or

45% improve performance
are currently using artificial intelligence within their tools

12% and processes
of respondents that are not exploring or using AI do not have a

37%
technology roadmap
of respondents that are currently using AI have a technology

84% roadmap, or currently developing one

Alternative Legal Services Providers

With nearly half of companies reporting the use +34%
of ALSPs in 2018 and 34% reporting an increase of respondents
over the past year, we expect to see demand indicated an
increased usage of
grow and usage continue to expand.
alternative legal
service providers
since 2018
ALSPs Named by Respondents

• Axiom • HBR Consulting
• Cobra • Integreon
• Consilio • Legility
• Deloitte • Lumen Legal
• Elevate • PWC
• EPIQ • Pangea 3 (then TR, now EY)
• Eversheds Consulting • Priori Legal
• FLEX by Fenwick • QuisLex
• EY
53% of respondents use an alternative legal services provider
13% of respondents use a single legal service provider
9% of respondents use more than three legal service providers

LAW FIRM
EVALUATIONS

21
LAW FIRM EVALUATIONS
Law Firm Review & Performance

% of Companies that Conduct Law Firm Performance Reviews
Review All Firms

13%
Review Most Firms (50% - 100%)
11%
Do not review firms
46%
Review Some Firms (<50%)
31%
Firm Evaluation Criteria Ranked by Respondents in Order of

Importance
1. Quality of Work
2. Cost Effectiveness More than 50%
3. Responsiveness & Timeliness of respondents use these
4. Results / Outcomes categories to evaluate firm’s
5. Understands & aligns with our business overall performance and
6. Service Delivery value
7. Diversity & Inclusion
8. Transparency & Information Sharing
9. Shared Values
10. Effective Use of Technology
11. Innovation & Creativity

What do Legal Operations teams want from

law firms?
Top Four Responses
More creative and

alternative pricing
arrangements
1 $
2 Better Project
Management
More internal use of

technology 3
Digital access to content,

4 advice, or customized
documents

What kind of innovation do you want to see

from law firms? (1 - 5, low to high priority scale)
Answer Weighted Average
More creative and alternative pricing arrangements 3.95
Better project management 3.79

More internal use of technology 3.58
Client-facing digital services with self-service access to
3.42
content, advice, or customized documents
Change in business structure/incentive model 3.16
Tech or innovation incubators 2.67
A dedicated innovation chair or council 2.59
More creative and alternative pricing

arrangements
Better project management
More internal use of technology

Client-facing digital services with self-service access
to content, advice, or customized documents
Change in business structure/incentive model
Tech or innovation incubators
A dedicated innovation chair or council
0 5 10 15 20 25 30 35 40 45
5 - High Priority 4 3 - Medium Priority 2 1- Low Priority

Member Topics and Interests
CLOC members indicated they’d like to learn about a variety of other issues
across the industry including:
• Biggest Challenges in Legal Operations

• Trends in Technology
• Diversity Numbers
• Legal Operations Org Structures
• Legal Project Management
• Legal Operations Salary Info
• Resource Planning
• And much more!

CLOC Core Competency Legal
Operations Reference Model
The 12 core competencies
represent areas of focus that every
legal operations department must
manage to have a disciplined,
efficient, and effective legal
operations function. They are also
part of a bigger picture:
determining legal operations
department maturity. The 12
competencies serve as a
benchmark to compare a legal
operations department’s growth
to others in the industry and break
down legal operations
departments into foundational,
advanced and mature in order to
improve and grow systemically.
© 2019 Corporate Legal Operations Consortium, Inc.
Survey Structure and Methodology

CLOC’s 2019 State of the Industry was developed by polling CLOC members during the first four
months of 2019 about their 2018 results. 213 companies responded about their corporate legal
operations departments. The survey consisted of questions that were designed to provide a
deeper understanding of legal operations expenditure, headcount, technology & innovation and
relationships with various legal services providers and law firms.
ABOUT CORPORATE LEGAL OPERATIONS CONSORTIUM (CLOC)

CLOC is 501(c)6 non-profit professional association. CLOC’s mission is to help legal operations professionals and
other core corporate legal industry players (e.g. tech providers, law firms, LPO’s, law schools, etc.) to optimize the
legal service delivery models needed to support the needs of small, medium and large legal departments.

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2019 STATE OF THE

2019 All Rights Reserved Corporate Legal Operations Consortium

213 Companies Responded

2 2019 All Rights Reserved Corporate Legal Operations Consortium

Company Breakdown by Revenue

$3.9T Collective Revenue

$6.3B Collective External Expenditure

Small < $1B

Medium $1B - $9.9B

3 2019 All Rights Reserved Corporate Legal Operations Consortium

2019 All Rights Reserved Corporate Legal Operations Consortium

Overall External Expenditure

External Expenditure Range by Respondent

$500M - $999.9M 0.6%

0% 5% 10% 15% 20% 25%

Median Internal Expenditure

5 2019 All Rights Reserved Corporate Legal Operations Consortium

Legal Expenditure Metrics

46¢ of every $1 spent on legal

Median External Legal

Median Internal Legal

6 2019 All Rights Reserved Corporate Legal Operations Consortium

% of Respondents 35% 36% 29%

7 2019 All Rights Reserved Corporate Legal Operations Consortium

Internal External % of Revenue

$160,000,000 0.90% 1.00%

8 2019 All Rights Reserved Corporate Legal Operations Consortium

2019 All Rights Reserved Corporate Legal Operations Consortium

Overall Legal Department Headcount

Average Legal Department Headcount (FTE) by Industry*

10 2019 All Rights Reserved Corporate Legal Operations Consortium

Legal Operations Titles & Org Structure

Titles of Legal Operations Leader*

Legal Operations Reports To

0% 10% 20% 30% 40% 50% 60% 70%

11 2019 All Rights Reserved Corporate Legal Operations Consortium

Legal Operations Headcount

Average Legal Operations & Legal Operations Contractor by Industry

# of Legal Ops # of Legal Operations Contractors

12 2019 All Rights Reserved Corporate Legal Operations Consortium

Legal Department: Legal Operations

Number of Legal Dept Staff per Legal Operations FTE by Industry

13 2019 All Rights Reserved Corporate Legal Operations Consortium

Headcount Breakdown by Company

Avg. Internal Spend

14 2019 All Rights Reserved Corporate Legal Operations Consortium

2019 All Rights Reserved Corporate Legal Operations Consortium

Use of Technology Solutions Roadmap

72% of respondents reported having a technology roadmap

% of Respondents with Implemented Systems & Tools

16 2019 All Rights Reserved Corporate Legal Operations Consortium

In-House Engineers & Technology

35% of respondents have dedicated in-house engineering resources

37% of companies spent more than $750K on legal technology in 2018

Average legal technology spend for mid-size companies with in-house

17 2019 All Rights Reserved Corporate Legal Operations Consortium

Most Commonly Used Technology

78% of respondents use an eBilling system

5 eBilling vendors account for 60% of the market share among