Spending on compliance and ethics programs, and compared to legal spending

During the summer of 2005, 412 inside corporate counsel responded to an online survey sponsored by ACC and Corpedia, a provider of ethics and compliance training. Some 85 percent of those respondents were at US-based companies, and 60 percent were with publicly-traded companies.

The surveyors reported that “for organizations between 1,000 and 9,999 employees, 26 percent are spending more than $1 million annually on their compliance and ethics programs. The summary does not indicate whether that means spending both internally and externally, but assume it is a total figure.

If we take the mid-point of 5,000 employees, that size of company would have about 12 lawyers (using data from 123 companies in the Hildebrandt 2005 U.S. Law Department Survey, and 2.55 US lawyers per 1,000 U.S. employees at the median), and thus a total legal spending in the rough vicinity of $12 million (assuming about $400,000 inside and $600,000 outside spending per lawyer). The ratio of ethics and compliance spending to legal spending would then be less than 1 to 10.

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