An essential benchmark metric: lawyers per billion of revenue

The many posts on LawDepartmentManagementBlog about the ratio of lawyers per billion of revenue fall into three clusters: metrics for a specific company; explanations of what drives the metric; and wider-ranging coverage about the metric.

In the course of describing specific law departments, I sometimes mention their lawyers per billion (See my post of March 28, 2006: EMC at 7 lawyers per billion; Feb. 25, 2007: SAB Miller at 5; Nov. 11, 2007: Red Hat estimated at 15; Nov. 27, 2007: ConocoPhillips at less than one lawyer; March 1, 2008: DuPont at 7; June 6, 2006: Honeywell’s dramatic drop; and Feb. 16, 2009: FBI at 30 lawyers per billion of budget.).

Factors that influence the ratio have appeared frequently (See my post of Oct. 31, 2005: Europe and in-house privilege hasn’t decreased the ratio; Nov. 9, 2006: as size of company goes up, the ratio goes down; Jan. 18, 2007: differences between industries in lawyers per billion; Feb. 1, 2007: effect of partnering at Cummins, with 2.1 lawyers per billion; Nov. 26, 2006: effect of contract lawyers; Dec. 6, 2007: why lawyers per billion has decreased over time; and Feb. 24, 2009: intangible density may explain metrics.).

The third category of posts here regarding lawyers per billion of revenue ranges widely (See my post of May 14, 2006: how problematic this denominator can be; Nov. 20, 2006: FMC shrank its ratio; Dec. 3, 2006: worldwide ratio of 3.1 applied to Fortune 500; Dec. 31, 2006: how to weight the ratio by revenue; Dec. 5, 2007: 1992 median of seven lawyers, but 2007 was 3.3 lawyers per billion of worldwide revenue and 4.2 lawyers per billion of US revenue; Dec. 21, 2008: trend down over 25 years; Feb. 12, 2009: data from small law departments runs about 4.4; and Feb. 19, 2009: revenue per lawyer or lawyer per revenue.).

Post script: Practice area benchmarks sometimes normalize their metrics by revenue (See my post of Feb. 25, 2008: practice area benchmarks with 24 references.).