I have speculated several times about why it is that the larger the company the lower the total legal spend as a percentage of revenue. Candidates to explain this established metric in favor of larger departments include greater specialization of lawyers; more investments in technology; the services of better law firms or lawyers within the firms (See my post of Aug. 5, 2005 about A-team assignments.); legal intimidation of smaller companies (See my post of May 4, 2005 regarding patent lawsuits.); more flexibility and precision in assignments; better educated clients (See my post of Oct. 2, 2006 about mature companies in mature industries.); and older, more experienced lawyers (See my post of March 16, 2006.).
If legal talent is not evenly distributed among law departments, but instead gravitates toward larger departments, there might be additional reasons. Possibly larger companies are able to recruit and keep more qualified in-house counsel because of their higher pay, more generous stock options, or richer benefits packages; possibly its broader career choices, national reputations as brand names, or improved in-house training.