The tenure of the general counsel does not relate to cost control: years in the position shows no association with total legal spending
I thought that the longer a general counsel has served a company, the lower total legal spending would drop as a percentage of revenue. A veteran general counsel would know the company better, understand its key personnel, be close to the company’s strategy and legal risks, and have shaped the law department to cope with all that. Don’t we get better the longer we do something?
Apparently not. Assisted greatly by Aspen Law & Business’ Directory of Corporate Counsel 2010 (more information write here), I combined legal spending data from 29 US manufacturing companies in my benchmark survey with the Directory’s excellent demographic data about their general counsel. The Aspen demographics and the General Counsel Metrics data let us test my hypothesis: tenure correlates negatively with legal spend adjusted for revenue, i.e., the longer in office, the lower the legal spend.
Unfortunately, based on this set of data, the expected correlation between years as the chief legal officer and total legal spend does not show up. To my disappointment it is slight although negative. It does not appear, therefore, that tenure contributes in any material way to managerial efficacy as judged by spending efficiency.