Tiny law departments; huge legal spending

In the ACCA/Serengeti 2004 survey, the sub-report for one industry that I studied showed data for 30 respondents on total legal spending. Of them, a dozen companies had sales of $100 million or less. Two of the dozen had itty bitty total legal spending, one was typical (around 0.2-3% of sales), while nine were between a percent and six percent of sales! Proof of economies of size. (See my post of May 4, 2005 on TLS as a percentage of revenue declining as revenue increases and Aug. 5, 2005 about quality of firms by size of company.)

A second point comes from this data. Even companies with little revenue – here seven companies with less than $10 million in annual revenue had at least one inside lawyer! – can spend like the proverbial besotted swabbie.

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