Mergers and bankruptcies reduce the number of law departments; breakups of companies and spinoffs of major operations create law departments. The NY Times, Jan. 19, 2011 at B 5, discusses the tale of conglomerates, tracking stock and tax-free spinoffs. It mentions Fortune Brands, Motorola, Sara Lee, and ITT as corporate splits along with Cargill cutting Mosaic loose as a spinoff. Each of those corporate upheavals will spawn a law department.
Deeper, though, is my question whether the number of US corporate law departments over the past twenty years has increased in proportion to population or GDP. I assume that people and productivity correlate to business creation and growth. We hear all about mergers; the point where a CEO first decides to hire legal talent inside passes without fanfare. Even while the heralded huge companies swallow others and wipe out law departments, smaller companies that bring a lawyer inside may be swelling the ranks of law departments just as fast.
What the net result is of creation and destruction of law departments may be impossible to figure out (See my post of April 9, 2006: Tyco, Cendant and Wendy’s spin offs listed; Sept. 25, 2006: LANXESS spun off from Bayer Chemicals; Nov. 20, 2006: spun off companies and the size of their law departments (FMC Technologies); March 2, 2008: Spectra Energy spun off from Duke Power; and Feb. 15, 2009: tough early years for a law department of a spin-off and mentions Kraft from Philip Morris, Catalent from Cardinal Health.).