Different treatments of costs included in law departments’ internal budgets

Although legal-department benchmarking studies always compare inside spending, no one has definitively defined all its components. In a recent project, we encountered three problematic situations. One law department includes severance costs in its budget; many law departments never see them because HR picks up those costs. Some law departments are charged with the value of stock options and restricted stock grants they award; other departments never see those costs. Most law department budgets include the compensation of the general counsel; for other departments, that cost is carried on an executive officer budget.

Use benchmarking data as directionally correct, recognizing that departments differ at the margins in what they include in and exclude from their budget