To know your total spend is not enough; put it in the corporate context with a ratio to revenue

Don’t congratulate yourself and stop once you have gathered and confirmed the total amount your law department spends. Stopping there is a risk, as Ron Pol sees it, because “measuring total legal costs reinforces perceiving legal as a cost-center drain on resources.” He points this out in ACC Docket, Dec. 2010 at 20. Better to state legal costs as a percentage of corporate revenue, “a more strategic viewpoint [that] links legal directly with core organizational goals.”

Pol is right. Costs of support groups tax the bottom line, so a good strategy for a company is to moderate those costs, including legal costs, while still attentive to quality and coverage. A general counsel who thinks in terms of legal costs expressed as the share of revenue devoted to them will be closer to the client’s strategic heart beat.

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