Ten most fundamental metrics for general counsel and interested observers

For US law departments that have more than five lawyers, here are the fundamental ten metrics:

  1. They spend approximately 0.5% of their corporation’s revenue each year on their inside plus their external spend.

  2. That benchmark for “total legal spending” does not include settlements, judgments and fines, which vary widely but are typically considerably less.

  3. A legal department’s internal expenditures are typically about 40 percent of total legal spending.

  4. On the order of 75 percent of the internal departmental budget is salaries, bonuses, and benefits overhead.

  5. The next largest category of internal spend is (or should be) for facilities, at 5 percent or so.

  6. About 60% of the total legal spend typically goes to law firms and other external service providers (approximately 90% to firms).

  7. Of the external spend roughly a half is litigation-related.

  8. Commonly, US legal departments have between three and seven lawyers per billion dollars of revenue, depending on the industry.

  9. The fully-loaded cost of an internal lawyer ranges from $160 to $250 per hour.

  10. To have one lawyer for every non-lawyer in a department is a normal ratio.

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