Two more clues as to how many legal departments there might be in a country: traded companies and corporate tax returns

I’ve been on a kick to figure out the number of law departments in this country. One method might be to count the number of companies in the United States that have publicly traded securities. Not all of them have an internal legal function, we can accept, but quite a large portion probably do, since they certainly have securities law issues and reporting, they have enough employees to sustain the company, and they have enough of a history and revenue to have launched an IPO or spin off (See my post of Feb. 23, 2010: dearth of data on privately held companies.).

Morningstar reports on over 7,500 publicly traded U.S. companies while “As of Dec. 31, 2008, NYSE Euronext ha[d] approximately 8,500 listed companies,” according to Answers.com. http://wiki.answers.com/Q/What_is_the_number_of_publicly_traded_companies_in_the_US

Perhaps 90 percent of them have at least one employed lawyer who practices law? And, is it plausible that as many more companies are privately held but also have a legal department? If so, a projection of something on the order of 14-17,000 legal departments in the United States corroborates previous estimates (See my post of April 30, 2010: three indicators point to around 20,000 departments, and James Merklinger’s comment in support of that estimate.).

For the second method of estimation, the Internal Revenue Service probably releases how many corporations reported income of more than $200 million, for example. At that size, or thereabouts, more than half of them probably have an in-house legal team. I found a clue. Syracuse University’s Transactional Records Access Clearinghouse (TRAC) released and analyzed some IRS audit data. If I read TRAC’s report properly, it shows 5,734 returns filed by “large corporations,” those with assets of $250 million or more. The connection between assets and revenue eludes me, but they sound like big companies, probably with legal departments. Beyond that glimpse, I am optimistic that the good folks who collect our taxes know how many companies there are in the United States that are of a size likely to sustain an internal legal function.

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