Total legal spending and the inclusion or not of depreciation charges

Every year, the value of technology owned by a law department loses some value – it depreciates. The different treatment by law departments of the depreciation charge on hardware and software makes for differences in what they report as their total legal costs. Total legal spending, therefore, has yet another variable and yet again calls the coverage of the term into doubt (See my post of March 22, 2006 about GC compensation and collected references.).

At least one law department includes in its inside budget a six-figure number for the depreciation of its hardware (I doubt that law departments depreciate licensed software.) Most departments, I suspect, do not reflect depreciation because they are unaware of the need or that expense is treated on the books of the company through the IT function.

Nevertheless, it is another cost of maintaining an internal law department (See my post about the inclusiveness of total legal spending of Sept. 4, 2005 (the ultimate metric.)).

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