State-owned enterprises that have law departments probably differ from private-enterprises in their benchmark metrics

Many of the largest companies in the world are owned in whole or part by a government. In Italy, for example, the government owns substantial stakes in Sace, an insurance group; Simest, a financial institution; Fintecna, a service provider; Eni, an oil company; Enel, a power utility, and Finmeccanica, a military conglomerate. When I read about these state-owned entities (SOE) in the NY Times, June 16, 2012, at B6, I thought also of China’s many SOE’s and the myriad others around the world.

The competitive tension and cost-consciousness of private companies (whether publicly traded or not) and their consequent decisions on legal staffing and spending inevitably result in lower benchmarks than those of SOEs. When a government runs a business, political and social forces push toward different decisions regarding employment and budgets. Leading candidates that reflect the difference would include lawyers per unit of revenue and legal spending in proportion to revenue, all of which would likely be seriously warped by the inclusion of inefficient SOEs in a benchmark study.

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