If you increase leverage in your department, you drive up your fully-loaded cost per lawyer hour

Previous posts have addressed different aspects of the fully-loaded cost per hour of corporate counsel (See my post of Nov. 16, 2005 and links; Aug. 15, 2005 on facilities costs; and Dec. 16, 2005 on consequences of understating this metric.) What hasn’t been discussed is the invidious effect on it when a law department adds a paralegal or a non-lawyer specialist (See my post of Sept. 10, 2005 on the range of such roles.).

The costs of the new non-lawyer drive up the fully-loaded cost per lawyer hour. If that increase makes the law department look more expensive – or worse, inflates the hourly rate charged clients – it creates a conflict for the general counsel. To do the right thing, build leverage and skills, makes the legal function look more costly. One antidote is to show that total legal spending as a percent of revenue declines.

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