Barring a blowup, law department operations don’t concern the Board of Directors

I doubt that the Board of Directors of companies care one whit about how the law department runs. To them, it’s a black box. Unless there is a problem such as an anti-trust investigation or a gargantuan lawsuit, where for a bit they may wonder about how the problem is being handled, all they care is whether the advice they get seems sound, useful, and timely (See my post of March 24, 2011: too much of an assumption of involvement by Board.).

When the total cost of the legal services hovers around a half percent, even if that fruit were thought to be low hanging, it is tiny fruit. Moreover, if you cut either inside or outside, the other will likely rise and wipe out some of the savings. Beyond cost, the knottiest risks and unknowns a company faces are not in the lawyers’ purview. The company-crushing risks of poor products, expensive manufacturing or distribution, lousy marketing and other quintessential business concerns matter far, far more than legal stumbles. When legal swords flash, only extremely rarely do they cut to the company bone or need to come to the attention of the Board, and never do the operations, structure, and costs of the legal team.

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