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Compensation, three-quarters of internal spend, and lawyer comp is three quarters of comp

Compensation makes up three quarters of the typical inside budget of a US law department, so the fully-loaded cost of the lawyers in a given law department is a result mostly of paychecks. According to Bus. Law Today, Vol. 17, Jan./Feb. 2008 at 6, data from Hildebrandt’s 2007 Law Department Survey shows that law departments are spending more than 80 percent of their inside counsel dollars on compensation (See my post of July 31, 2005 about compensation rising 7% a year, including equity awards.).

Of that compensation driven budget, I have seen in benchmark surveys and consulting projects that the compensation of the lawyers accounts for three quarters of the total departmental compensation.

Going one metric further, it may well be that base comp – salary — accounts for three quarters of the total lawyer compensation.

I am attracted to such Russian-doll metrics, where each one you open contains a comparable, but smaller metric. So, 75 percent of the inside budget is compensation; 75 percent of that compensation is for lawyers; and 75 percent of the lawyer compensation is salary (See my post of Oct. 24, 2007 on a possible progression of 60% metrics about litigation support costs.).