Decentralized law departments, not knowing full staff and spending figures, may slightly lower published benchmarks as compared to actuals

Consulting to a law department that does not know how much business units spend on outside counsel or how many lawyers practice law inside the company – both afflictions due to the decentralized operating style of the company, I realized that the available benchmarks for legal departments may be slightly low.

More than a few general counsel preside over a loose confederation of staffing and spending, without visibility into the full numbers. Some, in truth, may not want to know lest they be held accountable for what is not manageable. To the extent of the omitted figures, available benchmarks such as lawyers per billion of revenue undershoot to some unknown degree.

Revenue figures have solidity, as they are audited by external accountants and reported to the SEC and other government entities. The total number of people providing legal advice and the cost of both them and the external counsel they hire, by contrast, lacks such solidity for some companies. For that reason, a benchmark figure such as legal spending as a percentage of revenue stands a bit lower than reality to the degree that full numbers don’t come to light.

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