8 Distinctive Characteristics of the Billion Dollar Legal Department

by | Jan 9, 2014

Looking across the entire sample in the 2013 Law Department Metrics Benchmarking  – the data indicates corporate legal departments employ roughly 8.3 fulltime employees, including 4.7 attorneys in the corporate legal department for every $1 billion in revenue.

This looked like an interesting segment of the survey sample, so we drilled down on the data specific only to those respondents from largest companies.  Twenty-eight survey respondents reported working for companies with revenues of $5 billion or more and maintain legal operations with the characteristics listed below. What emerged was a profile of the legal department inside a multi-billion dollar company.

1. Attorneys.  Large legal shops employ an average of 49.2 attorneys working in more than 25 different practice areas.  The largest practice areas are commercial contracts (12.6%) and litigation (12%) with other practice groups spread out in much smaller percentages.

2.  Staff and paralegals. Law departments inside multi-billion dollar companies employ an average of 24.1 paralegals and 29.2 fulltime employees working in administration.  The largest law departments employ 101.2 total staff.

3.  Workloads up. Large law departments report overwhelmingly (89.7%) that workload has increased over the previous snapshot of time for these studies.  Most (57.7%) say workload has increased between 5-10%, while about one-fifth say the workload has increased between 10-20%.

4.  GCs as the corporate secretary? The title and responsibilities of “corporate secretary” are evenly split among the top legal officers in the largest companies.  Half report their chief legal officer (CLO) or general counsel (GC) also carryout corporate secretary duties while the other half does not.

5.  Diversity programs. Most of the largest law departments do not have written diversity policies – just 46.4% report having one.  However, 64.3% report their law department actively engages in diversity initiatives aimed at recruiting and retaining diverse lawyers.

6. Sweet spot of experience. A majority of attorneys, to the tune of 80%, practicing in the largest legal departments have between 3-7 years of experience. However, it’s worth noting these departments employ lawyers at all levels – from less than one year of experience to more than 30 years of experience.

7. Legal spend by the numbers.  Most of these large departments report budgets are stable – 85.7% report their budgets have not been cut.  On average, these departments spend two-tenths of a percent (.2%) of revenue on inside and outside legal expenses.  It’s important to note this does not include all costs.  On the split of spending between inside and outside counsel – 45.5% of law department’s budget is spent on in-house expenses.

8.  Trends in legal service providers.  On average, the largest corporate legal departments employ roughly 125 different law firms and spend an average of $870,310 per legal service provider.  However, 24% of their total spending goes to the law department’s top law firm. Sixty-three percent of these law departments use alternative fee arrangements for between 1-20% of their work.  As a percentage, the use of AFAs was up as compared with the previous year.

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With registration, this year’s report is freely available to download and is filled with hundreds of data points useful for benchmarking purposes.  The studies from previous years are available for purchase on ALM’s website.

Photo:  Flickr

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5 Takeaways From The Legal Department Benchmarking Survey

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