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The interplay between Legal and Finance

Dealings between lawyers and the finance function within a company cover many topics (See my post of Dec. 7, 2005: interactions of Legal and Finance; Nov. 23, 2008: RACI roles for Finance; Sept. 14, 2005: lawyer-client privilege and information sent to accounting; March 12, 2005: law department paid for some software because it reduced reserves; March 18, 2007: six posts on reserves and two on accruals; and Nov. 5, 2006: accounting personnel handle law firm invoices.).

The rule-making authority of Finance manifests itself in several posts on this blog (See my post of April 17, 2006: when to create some matters; Nov. 10, 2007: three-way approvals of invoices, including Finance; April 13, 2009: invoice authorization levels; and Dec. 2, 2007: purchase orders,). Budgets from the legal team are the particular concern of Finance (See my post of Nov. 25, 2005: budget of legal department set by Finance; Jan. 25, 2006: CFOs demand budgets months in advance; and Nov. 13, 2007: Dell negotiates budget with Finance.).

Some companies compare the legal group and the finance group on benchmarks (See my post of April 9, 2005: finance, IT and HR benchmarks; Sept. 4, 2005: total spend as a percentage of revenue for staff groups; April 6, 2008: benchmark against Finance; and June 26, 2008: Finance contributes 10% of company’s value.).

Law department reporting lines, at least in Europe, sometimes go to the CFO (See my post of April 12, 2006: UK heads of legal sometimes report to Finance head; and July 25, 2005: AXA’s GC reports to head of Finance.).

I should also mention some related topics, notably the law department as a profit center and accounting terms (See my post of April 27, 2008: profit center with 18 references; March 18, 2007: accounting terms with 15 references; Aug. 12, 2008: options expensed; Sept. 5, 2007: compensation over $1 million; and Dec. 3, 2007: cash basis and reserves and P&L.).

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