In-House Counsel

Does its litigation spend or volume indicate anything about margins of a company?

By Rees Morrison

An aggressive, creative company ? one that probably has higher margins than a less pushy company does ? is likely to face more lawsuits than a relatively stodgy company that sticks to its knitting. If the brash company challenges other companies, pushes into new areas, creates markets, and tries innovative marketing and financing, doesn?t it stand to reason it will accumulate more litigation, both as plaintiff and as defendant? But, the investment, as it were, in that litigation presumably inures to its growing revenue and wider margins.

More generally, margins as a denominator for certain benchmark metrics may give a different picture than revenue. More rewards (margins), more risks (cases in court).

Full post as published by Law Department Management on March 23, 2009 (boomark / email).