A nominal trend downward over 25 years in lawyers per billion of revenue

The basic benchmark metrics relied on by general counsel change very little over time (See my post of Dec. 7, 2007: stability of staffing benchmarks.). For example, I exhumed an Altman Weil Special Report, dated 1982, that presented data on 96 companies that had $1-$2 billion in revenue (1982 dollars, so that might be the same as $5-10 billion dollars today). The report gives the “salaried lawyers” for those companies by quartile.

Mathematically crude though it may be, I divided the salaried lawyer figures by the mid-point of the revenue range, which results in 4.7 lawyers per billion dollars at the first quartile (25% of the lawyer/revenue figures were below that), 7.6 lawyers per billion at the median, and 12.9 lawyers per billion at the third quartile.

Ten years pass. The 1992 Price Waterhouse Law Department Spending Survey reported on about 20 companies with revenues of $5-10 billion. The quartile figures for that survey as to lawyers per billion were 4, 5, and 8.

Five years later, its 2007, and Jon Bellis of Thomson/Hildebrandt reported on a group of 156 law departments (I do not have data on large law departments in that group, but usually lawyers per billion declines as law departments increase in size.), based on US revenue – which I presume is the most comparable basis rather than worldwide revenue to the earlier studies. The quartile figures are 2.5 lawyers per billion dollars of revenue, 4.2, and 7.5.

Taking all three studies, granting the various ways they do not match but looking for directional conclusions, if we compare the medians only, US law departments appear to have steadily gained efficiency, at least measured by revenue supported per lawyer. Twenty-five years ago the figure was 7.6 lawyers; 15 years ago, 5 lawyers; and last year, 4.2 lawyers.

Unfortunately, inflation’s swelling of revenue numbers may account for all of the putative gains of in-house productivity.