Thomson Reuters Legal Tracker LDO Index BENCHMARKING & TRENDS REPORT

Thomson Reuters Legal Tracker LDO Index BENCHMARKING & TRENDS REPORT

EXECUTIVE SUMMARY: KEY FINDINGS In this inaugural edition of the Thomson Reuters Legal Tracker LDO Index, we begin a series of semiannual reports that highlight qualitative and quantitative insights into the operations of legal departments. Why? Many of our customers have asked for deeper insight into legal departments evolving methods of operation. For this reason, the also includes a variety of responses to a survey conducted among Legal Tracker participants. In all, the survey received responses from 161 legal departments. Global survey results are being reported with respondents grouped according to standard groupings for Legal Tracker results. Legal Tracker results are compiled from anonymized matter data from over 1,000 participating legal departments, monitoring more than $71 billion in annual legal spend. Overall, the survey results, combined with Legal Tracker metrics, provide an intriguing picture of how legal departments are structuring themselves in a shifting legal marketplace where corporations are increasingly viewed as being in the driver s seat when it comes to determining how the market will continue to evolve. Unless otherwise noted in the reporting below, legal departments were grouped into the following categories: Small ($0-$4M in external spend) Moderate ($4.1M-$15m in external spend) Medium ($15.1M-$50m in external spend) Large ($50M+ in external spend) 1 There were five key areas of focus for this report, which are detailed below along with some of the key findings for each area. LEGAL DEPARTMENT OPERATIONS The employment of legal department operations (LDO) professionals is becoming much more commonplace, particularly among larger legal departments, regardless of whether the size of a department is judged by the number of in-house attorneys or by the amount of external legal spend. Legal departments are also taking a much more proactive stance with regard to how they use these professionals. Slightly more than half of legal departments surveyed have dedicated LDO staff. Among large legal departments (external legal spend greater than $50M or 51+ in-house attorneys), better than 9 have staff dedicated to legal operations These large departments were also more likely to see additional staff being dedicated to LDO, with 28% of legal departments with 51 or more in-house attorneys reporting an increasing number of internal staff devoted to legal operations Legal departments also view themselves as relatively proactive and sophisticated in managing external spend, with 58% of respondents using some combination of billing guidelines, invoice audits and legal bill reviews, and processes for management of timekeepers and matters VOLUME OF LEGAL WORK The volume of legal work handled by the average company has not appeared to diminish to any appreciable degree. In fact, the majority of survey respondents reported upticks in their overall matter volume. 62% of respondents report that the volume of legal work has increased in the past six months Small (68%) and large (73%) legal departments had the largest percentage of legal departments reporting increased volume, but a majority of respondents across all segments reported an increased number of legal matters Increasing workloads are not necessarily translating to increased human resources While, on average, 53% of responding legal departments reported an increase in the percentage of work handled in-house, only 28% reported an increase in the number of in-house staff in the last six months

Some of this new work is being sent to outside counsel 45% of respondents reported increased outside counsel spending But 31% have decreased spending on outside firms 38% of legal departments have increased the number of active outside counsel firms Technology and attempts at process improvement are also being leveraged to help legal departments do more with less 18% of legal departments have increased the legal department budget for technology 13% of legal departments have increased LDO staff OUTSIDE FIRM RELATIONSHIPS As a result of cost-control measures and a focus on better predictability in legal spend, legal departments have been able to rein in their average external spend, both in terms of average dollars spent per firm as well as average spend per matter. Average spend per firm was essentially flat year-over-year, with a slight decline of 0.6% Average spend per matter shrank considerably, down 8.1% compared to the previous year Legal departments are also increasing the scope of certain factors of their domestic law firm relationships to include more of their global law firms. Use of e-billing outside the United States is increasing with 25 an increase in the last six months Medium-size legal departments with spend between $15-$50M reported the largest growth in international e-billing with over 52% of respondents reporting an increase And while legal departments on average did a good job of holding outside counsel rates in check with only modest growth, rate growth among certain segments of law firm clients grew much more dramatically than among others. 65% of legal departments report outside counsel hourly rates increased over the last six months with only 4% of legal departments reporting rates have decreased Legal Tracker data shows that Am Law 50 firms enjoyed the highest average growth in rates across timekeeper index averages, with the largest YoY rate increases among Am Law 50 law firms COST-CONTROL STRATEGIES AND THEIR EFFICACY Survey respondents also highlighted a number of varying cost-control strategies they ve employed, most with varying degrees of success. Cost-control measures most commonly utilized include moderate enforcement of billing guidelines, fixed/flat fee set at matter level, volume discount, blended hourly rates, required law firm matter budgets, auto-reduction of invoice expenses The cost-control measures identified as most effective include auto-reduction of invoice expenses, required law firm matter budgeting, fixed/flat fees set at the matter level, and volume discounting The least effective cost-control measures, those with high utilization but low effectiveness rankings, include utilization of procurement policies and blended hourly rates Legal departments with staff dedicated to LDO also tend to be those that view themselves as more sophisticated in management of legal spending. Among those legal department who viewed themselves as sophisticated, strict enforcement of billing guidelines was identified as the most effective cost-control measure (5 of relevant respondents), with fixed/flat fee at matter level and competitive bidding, including RFPs, also earning high marks Metrics with highest utilization include: Total spend by law firm Total spend by matter type Total spend by practice group Number of legal matters opened/closed Savings from invoice review/reduction Total spend by business unit Less commonly utilized metrics include: Savings from alternative fee arrangements Cycle time average period from opening to closing of a matter Costs avoided by winning or settling a case quickly Law firm diversity SURVEY RESPONDENT DEMOGRAPHICS The following charts describe the general characteristics of those legal departments who responded to the online survey. External legal spend 18.63% LEGAL DEPARTMENT OPERATIONS (LDO) Legal operations professional are now present in a majority of legal departments, according to our survey respondents. According to the survey, on average, 51% of legal departments now have a dedicated legal operations function. A large legal department external spend closely correlates with a dedicated legal operations staff. Over 9 of the legal departments with spend greater than $50M have dedicated legal operations teams. Legal operations is also a growing field, with 13% of total respondents reporting an increase in legal operations staff in just the past six months, while only 6% reported a decrease. The percentage of respondents reporting LDO staffing increases generally increased along with the size of legal department spend, with 46% of large departments reporting an increase in LDO staff in the past six months. Percent of Legal Departments with Dedicated Legal Operations 10 32.3% 9.32% 39.75% Small ($0-$4M) Moderate ($4.1-$15M) Medium ($15.1-$50M) Large ($50M+) 93% Number of In-House Attorneys 34.16% 11.18% 1.86% 52.8% 0-1 Attorney 2-10 Attorneys 11-50 Attorneys 51+ Attorneys METRICS AND REPORTING Legal departments continue to explore how to best evaluate and report on their performance. Determining which metrics to utilize can pose a challenge. 8 6 4 41% 48% 57% 1 All external legal spend figures are reported as annual approved outside legal counsel spending. $0-$4M $4.1-$15M $15.1-$50M $50M+

Percent of Legal Departments Reporting Legal Ops Staff Increase 5 46% 4 3 21% 8% 6% $0-$4M $4.1-$15M $15.1-$50M $50M+ LDO STAFF BY DEPARTMENT SIZE The size of the LDO team also appears to correlate with larger legal department external expenditures, as 73% of legal departments with $50M+ in spend have three or more people dedicated to legal operations. Often this includes a director or vice president of Legal Operations. Small Legal Departments Moderate Legal Departments 6 59.38% 6 5 5 51.92% 4 4 3 12.5% 14.06% 14.06% 3 13.46% 23.08% 11.54% No Yes - 1 Yes - 2 Yes - 3+ No Yes - 1 Yes - 2 Yes - 3+ Medium Legal Departments Large Legal Departments 5 4 43.33% 8 7 6 73.33% 3 26.67% 5 4 16.67% 13.33% 3 6.67% 13.33% 6.67% No Yes - 1 Yes - 2 Yes - 3+ No Yes - 1 Yes - 2 Yes - 3+

VOLUME OF LEGAL WORK Given the relative state of unease in the legal marketplace over the last year due to factors with significant global influence, including the implications of Brexit and the U.S. presidential election, as well as the shifting fortunes of the M&A market, it is perhaps no surprise that a majority of survey respondents reported an increase in the overall volume of legal work as measured by the number of matters handled. Among overall survey respondents, 62% reported an increase in the volume of legal work. Only say that the volume of work has decreased. When broken down by segment, small and large legal department segments saw the largest percentage of legal departments reporting increased volume, though a majority of respondents in each segment said their workload had increased. Volume of legal work trend by legal spending increased volume Small ($0-$4M) 68% decreased volume The most significant changes are among the largest legal departments with 51+ in-house attorneys. Legal Departments 2-10 Attorneys 8 7 6 5 4 3 11% 62% 52% 55% 35% 45% 23% 35% Decreased Increased 13% 14% 6% 7% Legal Departments 11-50 Attorneys 8 7 6 5 4 3 7% 56% 51% 8% 52% 22% 48% 15% 28% 9% 39% Overall legal department headcount 13% Number of active firms Decreased Increased 6% 17% Budget for technology LDO-dedicated staff Moderate ($4.1-$15M) 53% 14% Volume of legal work Percent of legal work handled in-house More than half of all legal work handled by outside counsel Overall legal department headcount Outside counsel spending Number of active firms Budget for technology LDO-dedicated staff Volume of legal work Percent of legal work handled in-house More than half of all legal work handled by outside counsel Outside counsel spending Medium ($15.1-$50M) 55% 3% Large ($50M+) 73% 7% While there is not uniformity in the approach to handle this increased workload among in-house lawyers, some clear trends are emerging, involving some combination of changes in people, process, and technology. Increasing workloads are not necessarily translating to increased human resources Despite the majority of legal departments reporting an increasing volume of work placing increased demands on in-house attorneys, only 28% reported an increase in the number of in-house staff in the last six months The increased volume of legal work also appears to be leading to a resurgence in the use of outside counsel, after a period where legal departments seemed to be pulling work back in-house 45% of respondents reported increased outside counsel spending 31% have decreased spending on outside firms Overall, 38% of respondents have increased the number of active firms they are engaging for matters Recognizing that more matters spread across the same number of staff can create capacity issues, some legal departments are undertaking efforts to improve process and workflow for their legal matters 18% of respondents have increased the legal department budget for technology, looking for ways to increase the capacity and efficiency of their existing staff 13% of respondents have increased LDO staff as a means to streamline the process for handling their workloads Legal Departments 51+ Attorneys 10 8 6 4 5% 77% 62% Volume of legal work 56% 41% 35% Percent of legal work handled in-house More than half of all legal work handled by outside counsel 17% 55% Overall legal department headcount Outside counsel spending 33% 44% Decreased Increased 11% 28% Number of active firms 6% 28% Budget for technology LDO-dedicated staff While a good number of legal departments have begun to take steps to address their increased volume of legal work, it seems clear that many have not. The most common tactic for dealing with the increase appears to be increasing spend on outside counsel, which may indicate a reversal of the trend we ve seen of legal departments trying to bring additional work in-house for the sake of implementing better cost and process control. Or it may be an indication that legal departments are viewing this increase as a temporary uptick, so they would rather handle issues of scaling through outside resources instead of incurring the costs associated with adding internal headcount. This does not necessarily seem to be the case for legal departments that already have the greatest headcounts. More than 5 of respondents whose legal departments already had more than 50 attorneys reported increases in headcount in the past six months. Compare that to less than one-quarter of legal departments with 2-10 attorneys.

Among these departments with smaller headcounts, the most common responses were an increase in outside counsel spend (45%) and increasing the number of law firms they are engaging (35%). It is also notable that, despite the fact that 62% of lowerheadcount departments reported an increasing volume of work, respondents who indicated they had increased their outside counsel spend, technology budgets, or LDO staff were far from the majority. This suggests that perhaps these lower-headcount departments either aren t sure which tactics to employ to handle the increased workload or are hoping to be able to handle the uptick with existing resources. OUTSIDE FIRM RELATIONSHIPS Sparked by reforms stemming from the Great Recession at the beginning of this decade, legal departments have undertaken significant efforts to rein in their outside counsel expenses. That isn t to say that legal departments today are unwilling to pay for quality. Rather, they want to make sure they re getting value for the dollars they spend. And part of that equation means paying fewer dollars for things that do not bring value. Despite many legal departments experiencing an increasing volume of legal work, increasing outside counsel budget, and increase in the number of active outside law firms, data from Legal Tracker indicates that, for the most part, legal departments have done a good job of controlling their costs, at least with regard to average total spend by firm and average matter spend by firm. Among Legal Tracker participants, average total spend per firm held essentially flat, with a slight decrease of 0.6% in compared to 2017. At the same time, average matter spend by firm fell by 8.1%. Law Firm 2015 YoY Benchmark Index Average Total Spend by Firm $177,115 $176,034-0.6% Benchmark Index Average Matter Spend by Firm $18,103 $16,623-8.1% Source: Thomson Reuters Legal Tracker Analytics These two numbers may help explain each other. The average spend per matter decreased, even as the number of matters handled by outside firms seems poised for an increase. Handling a larger number of matters at a lower average cost per matter may well have enabled legal departments to hold their overall spend-per-firm level. It is important to note that there are some slight variations in the timeframes discussed here. Average total spend by firm and average matter spend by firm represent full-year figures for. The survey in which a majority of respondents reported an increase in volume of legal work covered a six-month period prior to March 2017, so there is some potential lag in the timing between when the calculations were done, showing the results for average spend, and when some of the respondents may have felt the brunt of the impact of the increasing volume of work. The Tracker data in this report may not fully reflect the impact of those legal departments who saw the bulk of their increase in legal work after January 1. Nor is it possible to know how many legal departments fell into this category. That being said, though, the average spend findings, particularly the sharp decrease in average matter spend by firm, strongly suggest that even those legal departments who did not begin to experience an increase in work volume until just recently would still be well positioned to absorb such an increase with minimal impact to budget, owing to the cost-control measures they d already implemented that resulted in the spending decreases seen in. GLOBAL LAW FIRMS The results of the survey also highlight the increasingly global nature of the legal market. Among respondents, 71% have legal spending outside the United States, and 28% of legal departments surveyed have more than of total annual legal spend outside the U.S.. In the last six months, 25% of legal departments saw an increased use of e-billing in non-u.s. offices, and less than 1% saw a decrease. The increased use of e-billing was most noticeable among medium-size legal departments, where 52% of respondents reported an increasing use of e-billing in non-u.s. offices in the last six months. Legal Spending % of legal departments reporting increased e-billing in non-u.s. offices Small ($0-$4M) 8% Moderate ($4.1-$15M) 27% 2% Medium ($15.1-$50M) 52% Large ($50M+) 33% decreased e-billing in non-u.s. offices OUTSIDE COUNSEL RATES Despite average spending figures holding the line, most legal departments reported rate increases from their outside counsel. Overall, 65% of legal departments reported outside counsel hourly rates increased over the last six months, with only 4% of legal departments reporting rates decreased. This shouldn t be surprising, as this time of year is when law firms typically put their annual rate increases into effect and, despite a steady influence of alternative fee arrangements (AFAs) in the market 2, the billable hour remains the basis for most legal matter billing, albeit with more input from the client than in years past. Legal Spending hourly rates increased Small ($0-$4M) 58% 3% Moderate ($4.1-$15M) 73% 4% Medium ($15.1-$50M) 72% 7% Large ($50M+) 53% 7% hourly rates decreased Legal Tracker data shows modest growth in rates across timekeeper index averages from 2015 to, with the largest YoY increases in average rates coming among paralegals. On the whole, partners, generally the timekeepers with the highest rates, saw their rates hold essentially flat for. Of counsel and associate timekeepers saw modest rate increases of 1.7% and 1.3%, respectively. Timekeeper Classification YoY Partner Index Average $521 0.1% Of Counsel Index Average $510 1.7% Associate Index Average $394 1.3% Other Timekeeper Index Average $218-8.3% Paralegal Index Average $188 3.5% Legal Assistant Index Average $191 0.7% Source: Thomson Reuters Legal Tracker Analytics When classifying rates according to law firms by segment, unsurprisingly, the highest rate increases can be found among Am Law 50 law firms. Among all segments of law firms, the other timekeeper classification has the greatest reduction in average rate. Am Law 1-50 Am Law 1-50 % Am Law 51-100 Am Law 51-100 % 2015 Am Law 101-200 Am Law 101-200 % Midsize Partner Index Average $817 3.9 $641 3. $427-2.5 $377-0.3% Of Counsel Index Average $679 4.7 $550 3.0 $407 2.9 $360 3.7% Associate Index Average $540 4. $437 1. $308 0.7 $278 1.1% Other Timekeeper Index Average $225-14.6 $211-1.7 $210-15.6 $222-0.4% Paralegal Index Average $265 3.6 $208 1.9 $174 4.6 $149-2. Legal Assistant Index Average $261 2.9 $250 6.3 $191 2. $155 4. Source: Thomson Reuters Legal Tracker Analytics Midsize 3 Percent Of interest among these results is the fact that, on average, only Am Law 100 firms managed to find growth in their average partner rates. And despite much talk of a lack of willingness on the part of legal departments to pay for associate time, particularly as they are viewed to be still learning their trade, all segments of law firms saw at least modest growth in their associate rates year-over-year. Of course, there is variation among rates based on industry and the type of work being done. In an effort to root some of these differences out, we also examined average rates by timekeeper among the five industries with the largest proportional representation among survey respondents. 2 Estimates hold that AFAs account for between 15 and of law firm revenues. See, e.g., 2017 Report on the State of the Legal Market, http://legalexecutiveinstitute.com/2017-georgetown-report/ 3 Midsize law firms, for the purposes of this report, are all other law firms with which Legal Tracker participating legal departments engage legal matters, but which fall outside the Am Law 200 rankings, as designated by American Lawyer.

Timekeeper Classification Construction Healthcare Financial Services Manufacturing Consumer Products Energy & Utilities Partner $388 6.3% $427 3.1% $458-7.3% $543 1.9% $465-11.9% Of Counsel $480 36.8% $436 5.6% $482-2.2% $509 1. $443 4.5% Associate $293 7.3% $320 7.4% $355-1.4% $395 2.9% $366-11.6% Other Timekeeper $181 22.3% $231 2.2% $232-2.1% $221-6.4% $243 2.5% Paralegal $163 27.3% $155-4.3% $157 17.2% $198 14.5% $191 42.5% Legal Assistant Source: Thomson Reuters Legal Tracker Analytics $148 1.4% $163 6.5% $174-4.9% $191 0. $190-14.4% Looking at these averages, among those industries most prevalently represented within the survey results for participating legal departments, Legal Tracker analysis shows that construction and healthcare saw the greatest average rate increases, with even the other timekeeper ranks seeing rate increases, while financial services and energy and utilities rates actually saw average decreases. And, while manufacturing consumer products saw only modest increases, the actual average rate paid by timekeeper class remained relatively high. COST-CONTROL STRATEGIES AND THEIR EFFICACY When it comes to controlling costs, there is no one size fits all strategy. Legal departments can choose from among a plethora of options to rein in their expenditures. But there is certainly great value in examining what peers are doing and how effective they view those efforts to be. Among legal departments surveyed, the most commonly utilized cost-control measures include: Moderate enforcement of billing guidelines (7 of respondents) Fixed/flat fee set at matter level (49%) Volume discount (46%) Blended hourly rates defined as fixed rate for partners, fixed rates for associates, etc. (43%) Required law firm matter budgets (42%) Auto-reduction of invoice expenses (42%) However, just because a particular strategy is widely adopted does not mean that it is proving to be particularly effective. Survey participants were also asked to identify which practices are most effective at cost control. To identify strategies that had high ratings for being the most effective strategies relative to their adoption, we examined the delta between those respondents who said they used a particular strategy and those who rated that strategy as the most effective measure. Among those strategies that were most commonly utilized, those with the smallest gap between percentage of respondents utilizing the strategy and those who found it the most effective were: Auto-reduction of invoice expenses (38% of respondents) Required law firm matter budgets (34%) Fixed/flat fee set at matter level (36%) Volume discount (28%) Cost-Control Measures Identify whether or not your legal department utilizes the cost-control measure and identify all cost-control measures that are most effective (choosing all that apply) Utilization Moderate enforcement of billing guidelines 7 47% Fixed/Flat fee Set amount at matter level 49% 36% Volume discount 46% 28% Blended hourly rates fixed rate for partners, fixed rate for associates 43% 23% Law firm matter budgets required 42% 34% Auto-reduction of invoice expenses 42% 38% Reallocation of work to firms with lower rates 37% Fixed/Flat fee Set amount(s) at certain stages in litigation 35% 22% Utilization of procurement policies 35% 5% Strict enforcement of billing guidelines 34% 38% Competitive bidding (RFP) 31% 23% Discounted rate cards 31% 16% Auto-reduction of timekeeper rate increases 28% 32% Retainer/Prepayment 27% 7% Set cap on matter fees 26% 14% Set cap on timekeeper rates 25% 11% Law firm matter budgets enforced 23% Limit use of first-year attorneys 7% Fixed/Flat fee Set amount at group level (matters of a specific type or practice area) 19% 12% Utilization of procurement department to execute retention contracts with law firms 19% 3% Percentage contingency fees 13% 3% Results driven fees variations in fees based on outcome 12% 5% Set discounts based on average hourly rate for jurisdiction 11% 3% Utilization of preferred firms/panel program 18% Speedy pay discount 8% 5% Most effective costcontrol measures Among those firms that viewed themselves as optimized or predictive in their management of LDO issues, the rankings of effective strategies changed. Strict enforcement of billing guidelines was identified as the most effective cost-control measure, with 5 of that subset of respondents ranking it as effective. Following closely behind, fixed/flat fee at matter level and competitive bidding tied at 47% each. On the whole, this may well be a reflection that legal departments that view themselves as more sophisticated in their approach to LDO are also better equipped to handle cost-management strategies that generally require a greater level of oversight. The fact that legal departments that viewed themselves as more sophisticated also tended to have larger and often more senior LDO staff likely contributes to this comfort with these more complex strategies as well. In keeping with the rest of their colleagues, more sophisticated legal departments highlighted two of the same strategies discussed previously as having high utilization but low relative effectiveness. Procurement policies were utilized by 55% of more sophisticated legal departments, but only 5% ranked them as effective. Similarly, blended hourly rates were utilized by 69% of more sophisticated legal departments, but only 23% ranked them as effective. Among those strategies with relatively high utilization but low relative effectiveness, procurement policies led the way, with 35% adoption but only 5% viewing them as the most effective approach, followed by blended hourly rates, which were utilized by 43% of respondents but only viewed by 23% of respondents as the most effective option.

METRICS AND REPORTING The well-worn cliché says you can t manage what you don t measure. The challenge, though, is how best to measure and report on progress. This remains a question for most legal departments today. Along with the challenge set forth by many boards to reduce the legal department s perception as a cost center, there is a concurrent challenge for legal departments to measure the value they contribute to the business and how effective their efforts at controlling outside expenditures have been. There is no shortage of potential metrics upon which a legal department could report. But survey results show a relative handful of metrics that enjoy the widest adoption. Metric Total Spend by Law Firm 86% Total Spend by Matter Type 68% Total Spend by Practice Group 57% Number of Legal Matters Opened & Closed 48% Total Spend by Business Unit 48% Savings from Invoice Review/Reduction 46% Forecasted/Budgeted Spend vs. Actual Spend 4 Overall Utilization The list of metrics was virtually unchanged for legal departments with LDO staff, although utilization percentages were consistently higher among those legal departments. For example, among all survey respondents, 86% measured total spend by law firm, but 9 of legal departments with LDO staff, and 97% of departments with three or more LDO staff, tracked that metric. In fact, those legal departments with three or more LDO staff, and those who viewed themselves as optimized or predictive in their level of sophistication, generally adopted every suggested metric at a better than one in five rate. Metric Utilization: 3+ LDO Staff Total Spend by Law Firm 97% 9 Total Spend by Matter Type 8 83% Total Spend by Practice Group 67% 76% Number of Legal Matters Opened & Closed 73% 65% Total Spend by Business Unit 43% 54% Savings from Invoice Review/Reduction 56% 55% Forecasted/Budgeted Spend vs. Actual Spend 47% 46% Avg. Matter Spend by Law Firm 41% 5 Litigation Exposure 32% 46% Spend to Budget by Law Firm 3 33% Cost of Handling Work In-house vs. Sending Work to Outside Counsel 23% 44% Savings/Discounts from Timekeeper Rate Negotiation 34% 57% Savings from Alternative Fee Arrangements 27% 41% Cycle Time average period of time between opening and closing a matter 28% 21% Costs Avoided won case, settled quickly 17% 25% Outside Counsel Evaluation Results 21% 32% Law Firm Diversity 24% 26% Quality of Legal Outcomes 21% 26% Local Billable Hour Market Rates 21% 22% Utilization: Optimized or Predictive However, across the broader survey, some of these metrics saw much lower utilization rates. Metric Avg. Matter Spend by Law Firm 39% Litigation Exposure 28% Spend to Budget by Law Firm 28% Cost of Handling Work In-house vs. Sending Work to Outside Counsel 25% Savings/Discounts from Timekeeper Rate Negotiation Savings from Alternative Fee Arrangements 17% Cycle Time average period of time between opening and closing a matter 14% Costs Avoided won case, settled quickly 14% Outside Counsel Evaluation Results 13% Law Firm Diversity 13% Quality of Legal Outcomes 13% Local billable hour market rates 12% CONCLUSION Overall Utilization The pace of change in the legal market is unlikely to slow. For much of this decade, corporate legal departments have been viewed as the drivers of much of this change, but the reality is, most of them are being driven to change as much as the law firms they are trying to bring along with them. Many corporate legal departments are taking proactive steps to manage the changes they are facing. Whether it be increasing focus on LDO efficiency, strategizing to handle increasing volumes of legal work, restructuring relationships with outside counsel, reining in costs, or effectively managing how results are measured, legal departments face myriad challenges beyond those presented in the increasing number of legal matters they must address. Hopefully, understanding how peer legal departments are addressing some of these same challenges will spark ideas about how these challenges can best be confronted and overcome.

2017 Thomson Reuters S048515/5-17