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Quizzical on quantitative quiddities – odd data on litigation spend by billion dollar companies

In plain English, I can’t understand some survey data on the essence of litigation budgets. The Fulbright & Jaworski 2008 Litigation Trends Survey had participants from about 140 in-house counsel at companies with revenues above $1 billion. According to other benchmark surveys, such companies in the U.S. spend about a half percent of their revenue on legal costs, inside and outside, of which about 60 percent goes outside. So, one would expect a median spend of $3 million on outside counsel (.05 times $1B times .60). Of the spend on outside counsel, typically about 60 percent goes to litigation: hence, let’s test the $1.8 million predicted on litigation spend against the F&J findings.

Fulbright & Jaworski reports that for its billion-dollar companies, “72% reported an annual budget of $1 million or more.” That’s the source of my puzzlement. Where benchmarks predict litigation spend at the median of $1.8 million or more (half are above that amount, and some of the 140 billionaire companies are surely considerably larger), Fulbright found 28 percent spent on litigation less than $1 million. Perhaps that is the first quartile group, but the figure seems too low.

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