Lag and lead times in outside counsel spending

General counsel have a hard time synchronizing their outside counsel spend to their company’s fiscal years.  That spend lags the company’s calendar when a costly law suit erupts years after the events that triggered it; spend leads the company when a potential acquisition, for example, requires expensive counsel fees. 

In any fiscal year, perhaps as much as 40% of outside counsel spending falls into the lag bucket, such as with the defense of legacy litigation that arose with now-disposed of business units; perhaps 5-10% a year of external spending could be in the leading bucket, such as the expenses for prep and prosecution of a patent that may be years away from commercialization.

I have never seen metrics that divide outside counsel fees into lagging, current and leading, but the fact – and challenge to law department managers – remains that such spending spreads itself across a temporal spectrum.  A snapshot of spending, for example “our department spent $4 million in fiscal 2004 on outside counsel” mashed together current, past, and future drivers of legal spending.

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