Corporate staff size, financial performance – and law departments?

The Harvard Business Review (April 2005 at page 18) reported a study that compared the financial performance of companies in relation to the size of its headquarters staff.  Headquarters staff size correlates with size of company, but it did not correlate at all with the financial performance of the company.  A leaner headquarters does not necessarily mean a higher performing company.

What might this suggest about a centralized HQ legal department?  I have never seen a study that correlated the percentage of lawyers at the main location of the law department to the company’s total legal spending as a percentage of revenue.  Reasoning by analogy from the HBR study, I would predict no correlation evident.  One can envision a clustered headquarters staff spending bags of money just as easily as a completely dispersed legal function spending bags of money.

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