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Legal intensity and the competitive level in an industry

My speculation is that the degree of competition in an industry strongly determines the industry’s legal intensity. Benchmarks such as those on personnel and dollars per unit of revenue will vary between industries because of greater or legal competition.

You can measure competition by the number of firms (both public and private) operating in the industry. For manufacturers, some researchers use the Census of Manufacturers as their data source. They measure manufacturing intensity through the ratio of the dollar value of manufacturing companies in the industry and the total dollar value of shipments in the segment or industry.

Once enough benchmark data is collected for industries, and better for segments within industries, it will be possible to test my hypothesis (See my post of Dec. 14, 2005: legal intensity of regulation; Nov. 24, 2007: intensity equals complexity, volume, and velocity; Aug. 13, 2008: R&D spending correlates to total legal spend; Feb. 24, 2009: intellectual capital of a company and legal intensity; March 2, 2009: industries vary in level of legal issues; Dec. 3, 2009: R&D intensity and legal costs; Aug. 3, 2010: little difference based on legal intensity in law firm assessments; Aug. 16, 2010: technological and competitive aspects of industries; Dec. 27, 2010: benchmark data on inter-industry differences; and April 3, 2011: litigation in relation to growth and competition.).

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