Analyzing how legal departments are using outside counsel with Priori Marketplace data
Looking at the market trends that legal departments are facing, it seems like a lot is changing. The hype behind generative AI and large language models is unrelenting and the economic uncertainty coming out of the pandemic shows no signs of stopping. We recently analyzed the proposals submitted through Priori Marketplace, the leading legal platform for finding new outside counsel, over the past three years and want to share some interesting insights.
Overall, in-house counsel and legal operations professionals are relying more heavily on flexible resourcing to address the current economic environment. However, at the same time, the type of work they need to do remains largely the same. Read on for a closer look into some of the trends we found by reviewing our outside counsel hiring data.
Priori Marketplace Practice Area Trends
The big picture for Priori Marketplace shows that the top five practice areas legal departments are engaging outside counsel are: Commercial Contracts; Technology, Data Privacy and Security; Litigation, Arbitration and Disputes; Employment and Labor; and Intellectual Property. Additionally, since we launched a flexible legal talent offering in September, legal operations requests already represent 12% of all requests through the Marketplace.
Zooming into 2023 shows the same trend but also highlights the most interesting takeaway from this data: There is a long tail when it comes to the types of projects legal departments use Priori Marketplace for. Almost 70% of the projects on our legal marketplace include practice areas outside of the top five most-used practice areas.
Some of the more common practice areas included in the “Other” bucket are regulatory work, corporate finance, media and entertainment and real estate. However, the list covers a huge spectrum with more than 700 practice areas in total.
Priori Marketplace Rate Trends
Clearly, the macroeconomic factors currently affecting companies aren’t making a huge difference on the main types of work they’re accomplishing with flexible resourcing options through our legal marketplace. However, digging into the rate data shows another side of the story.
Legal departments use just about every type of fee arrangement through Priori Marketplace, however the hourly rate is still instructive and provides a good benchmark for the cost of engagements on the platform. This year, the average outside counsel rate charged on Priori Marketplace is $245.
While that number by itself may be helpful for legal operations professionals and in-house counsel doing comparisons, what is most interesting is that it has seen a drop from 2021 of 4.1%. It’s likely the overall economic environment is responsible for a lot of that drop. The Great Resignation created more supply in online marketplaces and an uncertain economic environment alongside budget cuts and hiring freezes has put pressure on legal departments to tighten up on spending.
If you’re an in-house counsel or legal operations professional and you’re wondering: This is interesting information, but if I’m looking to get the most for my legal spend on Priori Marketplace, what should I do? The answer is volume.
As you can see in the above graph, there is a significant reduction in rates for work on Priori Marketplace when volume increases. On average, clients receive a 23% reduction for volumes of 10 hours or more per week and that reduction increases to 36% for 30 or more hours. Similar to the benefits of creating preferred panels for law firms, when the legal provider you’re hiring knows they can count on a certain amount of business, they’re happy to provide a discount in return. This sentiment is also true on Priori Marketplace, as the data shows.
Priori Marketplace clients include the legal teams at Fortune 100 multinational companies, fast-growing tech startups and everything in between. They engage lawyers from our vetted network for projects of all types, such as overflow support, full-time secondments, flexible resourcing, staffing and projects requiring niche expertise. Clients can reduce legal spend by as much as 40–75%, meet diversity, equity and inclusion goals and eliminate inefficiencies in their search for the best outside counsel provider.