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Five reasons why globally dispersed US law departments might have lower total legal spending

Counter-intuitively, it may be that US law departments staffed around the world spend less on internal and external costs, in terms of revenue, than geographically centralized departments. The fundamental reason could be that the revenue their companies enjoy from operations in foreign countries outstrips what is made by US-bound companies. The ratio of that larger revenue, therefore, devoted to legal expenses falls.

Another reason could be that lawyers cost less per hour in non-US locations, so the general counsel gets more legal punch for the pennies than does a US-staffed general counsel. Labor cost arbitrage works its magic. Third, litigation expenses tower in the United States but are much lower elsewhere so the litigation tax on doing business falls across the borders.

Possibly, too, those companies that can handle significant international trade and do business around the world have generally learned to manage better than US-only companies. Global companies are larger, more mature, and settled in their procedures. The honed talent and systems carries through to fewer legal messes and costs. It may also be that the differing regulations and legal systems of the 50 States of America challenge companies as much or more than counterpart laws in countries.

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