General counsel’s compensation on executive budget line

A general counsel’s compensation may be included not in the law department’s budget but on the executive group’s budget. How often that happens is unknown to me, but it means that the inside budgets of some law departments understate the company’s total legal spending.

Given that lawyer compensation quite often accounts for about half of the inside budget, the inclusion or exclusion of the highest-paid lawyer’s compensation can make a material difference (See my posts about the inclusiveness of total legal spending of Sept. 4, 2005 (the ultimate metric), July 25, 2005 (costs of independent directors), May 30, 2005 (fines, judgments and settlements), Aug. 3, 2005 (equity awards) and Oct. 4, 2005 (insured matters).