Two views on whether facilities costs or technology costs are larger for legal departments

A provider of software technology to legal departments, Marcus Linden of LexisNexis, writes in Met. Corp. Counsel, Vol. 17, Sept. 2009 at 22, that after outside counsel expenses, “The next two largest drivers are salaries for in-house staff and technology costs.” He is correct about compensation-related costs dominating in-house budgets – an estimated 75 percent of the budget. But facilities costs for law departments that are assessed them are likely to be larger than technology costs.

Perhaps over a multiple-year period this might not hold, because in one year a department might invest hundreds of thousands of dollars in a matter management system and associated costs. But year-to-year, when only maintenance and depreciation come due, the imputed rental costs of a legal department are higher (See my post of Feb. 25, 2009: data of $17,000 per year per lawyer for facilities costs.).

Actually, I do not know enough about depreciation charges for technology hardware or how commonly legal departments absorb those charges in their budgets. But my guess is that Linden is not talking about technology depreciation either.