On autarky, plus a benchmark for the percentage of legal work handled inside

At Respironics, a $1.2 billion manufacturer of respiratory medical products, nine lawyers and three support personnel make up the internal legal department. According to the company’s general counsel, quoted in GC Mid-Atlantic, June 2008 at 9, that team handles “probably 90 percent of our non-international, non-litigation work internally.”

Economists call an economy that is self-sufficient an autarky. Such an economy does not rely on imports of goods or services. The Respironics legal department, with its four transactional attorneys who average 17 years of experience, takes care of nearly all the company’s legal needs on its own, without importing services from outside counsel. The hardworking legal department has been able to hold non-M&A legal expenses flat over the past three years, even though the company has been growing at an annual rate of 15 to 20 percent. The metaphor is that of an autarkic legal department.

The legal services the department imports are the classics of litigation and work abroad. This degree of self-sufficiency implies that inside spending as a percentage of the total legal budget is higher than the normal 40 percent or so (See my post of Dec. 5, 2007: typical ratio.).

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