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No companies calculate the full internal costs of litigation

Like the Holy Roman Empire was neither holy, Roman, nor an Empire, “Total Legal Spending” as used in benchmark surveys is neither comprehensive, nor within the sole purview of the law department, nor cash out the door. [For example, see my post on May 30, 2005 about missing data on judgments; my post of May 4, 2005 about TLS declining with company size.]

For nearly all law departments, some amount of spending on outside counsel or for fines, judgments or settlements end up in other budgets. Tax, to cite one obvious payor of such legal costs, joins risk management, and collections as TLS evadors. Then there are special reserve accounts or capital transactions. Another source of leakage are business units overseas who hire and pay lawyers out of their own budgets. Sometimes the marketing department or R&D picks up the tab for IP services. All in all, TLS is not all in all.