How full is your fully-loaded cost?

To calculate the cost to a company of its in-house lawyers, you need to include much more than base and bonus compensation (See my posts of Aug. 5, 2005; Oct. 18, 2005; and Jan. 6, 2006 on how to calculate the fully-loaded cost and what some of the missing elements are.).

Law departments should take into account a proportionate share of the cost of gardening, shuttle buses, security, and an almost infinite number of other expenditures by its corporate parent. Some lawyers take advantage of tuition reimbursement programs, place their children in day care paid for by the company, eat at subsidized cafeterias, or work out in fitness centers. Perhaps a corporate overhead load covers all these expenses, likely not.

Then too, sometimes lawyers receive severance packages which should be accounted for in the fully-loaded cost. There may be legal costs even, such as over a discrimination or wrongful-termination claim. Do law departments calculate the value of options and awards they grant (See my post of July 27, 2007 on valuing options.)?

If you put all incremental costs in the pot it might add 10 percent or more to the fully-loaded cost of a corporate lawyer, which would be on the order in the US of $15 to $25 an hour.

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