Post-Pandemic Depression? New Report Shows Corporate Legal Provider Counts Remain Low

Wolters Kluwer ELM Solutions’ Fifth LegalVIEW Insights Report Shows that Corporate Legal Provider Counts Remain Low

Data from ELM Solutions’ LegalVIEW database suggests that vendor counts have yet to recover from cuts made during the pandemic

In March 2021, ELM Solutions’ inaugural LegalVIEW Insights report examined the biggest shakeup in the outside legal services market since the Great Recession, with more than 90% of corporate legal departments (CLDs) reducing their active provider relationships. The fifth and latest study indicates that trend has yet to fully reverse CLD found to engage a median of close to 122 providers in 2021 – an 8.6% decrease from 2020. But dwindling vendor portfolios haven’t necessarily blunted CLD’s average external legal spend, which has grown by 36% over the last year in conjunction with the average dollar size of some law firm and client relationships.

“Law firms can grow revenue by expanding the number of clients they serve or increasing their average revenue per client,” said Nathan Cemenska, Director of Legal Operations and Industry Insights at Wolters Kluwer ELM Solutions. “Our findings show that unranked law firms lost clients but grew revenue by increasing the dollar size of the average client relationship.”

Additional highlights from the fifth LegalVIEW Insights report include:

• The average vendor count at “small” or “medium” sized organizations remains depressed. But CLDs based in large companies with more than $20 billion in revenue have continued to expand their use of providers since the pandemic, leveraging an average of 451 vendors in 2021 – up from 436 in 2020 and 433 in 2019, respectively.
• Firms in the Am Law 1- 10 failed to retain the market share gains they captured in 2020, dropping from a 14.1% share to a 12.6% share. Small and unranked firms outside the Am Law 200 enjoyed a more favorable trajectory, expanding their share of external legal department spend from 44% to 47.5% over the last year.
• Alternative legal service providers (ALSPs) continue to represent a small but potentially growing share of the market. However, that share is largely dominated by seven leading companies, with the industry’s remaining ALSPs accounting for only 4.7% of spend on alternative legal services.

ELM Solutions, part of Wolters Kluwer GRC, is the market-leading global provider of enterprise legal spend and matter management, contract lifecycle management and legal analytics solutions. The company provides a comprehensive suite of tools that address the growing needs of corporate legal operations departments to increase operational efficiency and reduce costs. Corporate legal and insurance claims departments trust its innovative technology and end-to-end customer experience to drive world-class business outcomes. The other legal solutions business of Wolters Kluwer GRC is CT Corporation. The division’s banking and regulatory compliance businesses are Wolters Kluwer Compliance Solutions and Wolters Kluwer Finance, Risk & Regulatory Reporting.

Wolters Kluwer ELM Solutions was named a leader in both the IDC MarketScape: Worldwide Enterprise Legal Spend Management 2020 Vendor Assessment and IDC MarketScape: Worldwide Enterprise Matter Management 2020 Vendor Assessment. The company’s award-winning products include Passport®, one of the highest-rated ELM solutions in the latest Hyperion MarketViewTM Legal Market Intelligence Report and TyMetrix® 360°, the industry’s leading SaaS-based e-billing and matter management solution. CLM Matrix, meanwhile, was named a “strong performer” in The Forrester WaveTM: Contract Lifecycle Management For All Contracts, Q1 2021 report. ELM Solutions’ LegalVIEW® portfolio of legal analytics solutions is based upon the industry’s largest and most comprehensive legal spend database, with more than $150 billion in invoices.