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Contrary to hype, total legal spending 2008-9 likely rose as a percentage of revenue

A press release by Thomson Reuters Hildebrandt BakerRobbins about its benchmark findings touts the first-ever decline in year over year total legal spending. In its words, “The 2010 survey showed a decrease in total legal spending – by 1 percent in the U.S. and by 2 percent worldwide – between 2008 and 2009. Over the previous nine survey years, total legal spending in the U.S. had increased by an average of 7 percent, with a range of 5 to 9 percent.” I have previously pointed out that the economic slump was a more likely cause of the dip than improved management (See my post of Oct. 21, 2010: it’s the economy, stupid.).

Based on figures from strategy+bus., Winter 2010 at 54, my point can be made even more forcefully. Among the 1,000 global companies that spent the most on R&D, their revenue plunged 11 percent from 2008 to 2009. This set of companies includes the largest companies in the world so its fortunes probably match the fortunes of the hundred or so companies in the Hildebrandt report. If corporate revenue dropped something like 10 percent but total legal spending only dropped two percent, then spending as a percentage of revenue actually climbed dramatically!

More specifically, but to the same point, the article adds that sales, general, and administrative expenses (SG&A) for the huge set of companies fell 5.4 percent. Legal spend falls into SG&A so, again, general counsel not only fought the currents of reduction but more than held their own.

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