Gartner Survey Reveals Only 20% of Legal Matters Sent to Outside Counsel Stay Within Budget Range

In-house lawyers report that total cost of matters sent to outside counsel fall within the planned budget scope only one-fifth of the time, according to Gartner, Inc., a business and technology insights company.

“Excess spending on outside counsel is a pressing challenge for legal departments because it diverts resources away from innovation and business growth,” says Rosemarie Griffin, Senior Principal, Research in the Gartner Legal and Compliance practice. “Passive oversight doesn’t drive cost-effectiveness, general counsel (GC) must help their teams adopt an active approach to matter management that sets clear expectations, provides continuous oversight, and evaluates performance at every stage.”

A survey of 200 in-house and law firm lawyers, taken through December 2024 showed that more than half agreed that in-house lawyers lack effectiveness at key activities related to managing outside counsel.

“This lack of in-house effectiveness at managing outside counsel is driving overspend,” said Griffin. “Further, without proper guidance, outside counsel work can fail to meet expectations and incur additional cost: Gartner estimates the average legal department spends $162,000 a year paying lawyers to duplicate, at least in part, the efforts of outside counsel.”

Active Matter Management
Traditional strategies, such as reducing external work, negotiating better fees, or selecting lower-cost providers, address the symptoms, but not the root cause, of overspend.  

The solution is to manage consistently through the lifetime of a legal matter, known as active matter management. This ensures in-house lawyers and outside counsel share a clear understanding of expectations and collaborate effectively to evaluate performance and keep matters on track and within budget.

“Lawyers who are effective at active matter management are twice as likely to keep matters within budget,” Griffin noted. “Yet, our survey data shows that less than half of in-house lawyers understand the budget range, and slightly over half understand timeline or goals at the start of a matter.”

GC must establish a standard process to improve active matter management, as in-house lawyers tend to use varying methods and approaches. This variation requires GC codify a process for actively managing matters across all stages of a matter lifecycle. GC should codify a process for their lawyers to actively manage matter throughout every stage of its life.

GCs should equip lawyers with essential knowledge and resources, such as budgeting templates, scoping checklists, process maps, and annual training. These tools help to clarify expectations, facilitate effective management, and provide a turnkey approach to ensure adherence to the standard process.

“Budgeting templates help both parties align financial parameters from the outset, while scoping checklists enable lawyers to communicate critical details to outside counsel, such as timeline, risk tolerance, and objectives,” said Griffin. “These resources will also help lawyers clarify their own expectations before engaging external firms, reducing rework and cost overruns, and ensuring alignment from the start.”

Gartner clients can read more in the Gartner report Drive Outside Counsel Cost-Effectiveness Through Active Matter Management, and nonclients can read Leadership Vision for 2025: General Counsel.

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