During the past twenty years, legal spend as a ratio of corporate revenue has not budged

Richard H. Weise, Representing the Corporate Client: Designs for Quality (Prentice Hall 1991), Chapter 3, describes a benchmark survey conducted in 1989 by Motorola. It gathered data from about 80 US companies. Quite interesting to me is its data on “Ratio of Total Legal Budget to Total Sales Amount.” One subset of law departments were very large — corporate revenue of $9 billion twenty years ago is likely to be more than $25 billion today. The figure given for those behemoths on 3-Ex-30 is 0.26 percent. The 63 companies participating so far in the General Counsel Metrics study that reported 2009 revenue of at least $20 billion have median total legal spending as a percentage of revenue of 0.22 percent.

In other words, during a tumultuous two decades, marked by enormous changes in laws and business practices, law departments tossed and turned and growing hugely in numbers of lawyers, globalization rampant and entire legal domains created (corporate social responsibility, environmental, employment discrimination, FCPA, to name a few), the share of company revenue consumed by legal services has barely budged.