Cost per hour of inside counsel interacts with lawyers as a percentage of all legal staff

For a given internal budget, law departments vary significantly in their calculated cost per lawyer hour depending on the number of lawyers they have. If 1,800 chargeable hours per attorney is assumed, then an internal budget of $4,500,000 means $312 per hour if there are only 8 lawyers, $250 per hour if 10 lawyers, and $208 if 12. Cost per lawyer hour, spend held constant, varies by the number of lawyers.

Now consider leverage for a given total legal staff. If the department with the least lawyers (8) has 12 paralegals, admins, and others, its ratio of lawyers to all legal staff (ALS) is 40 percent. The ten-lawyer department with 10 staff has 50 percent lawyers, while the 12-lawyer group, with 8 staff, has 60 percent lawyers of its total staff. The more staff per lawyer, total staff held constant, the higher the cost per lawyer hour.

These interacting components, structure and cost, present a difficult area in which to recommend best practices. You can vary the number of lawyers and the number of non-lawyers in a huge number of combinations. The optimal mix will be better understood when there is a benchmark database large enough to show how the various combinations correlate to total legal spending as a percentage of revenue within an industry.

Help learn the optimal mix and also find out how your legal department stands. Take part in the largest benchmarking database ever assembled! Get your full report in April by clicking here to take the six-minute, confidential online survey based on your fundamental 2009 metrics. More than 200 departments have responded since late January.

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