In-House Counsel

Where?s the luster of DuPont in light of its metrics on legal spend and staff?

By Rees Morrison

Volumes have been written on DuPont?s management initiatives to improve its law department?s effectiveness (See my post of June 30, 2006 on the marketing of law departments and four references to DuPont.) Hence, it caught my attention where a piece in Corp. Counsel, Vol.15, Jan. 2008, at 111, states that DuPont's "legal team has an annual global legal budget of around $230 million." I used that figure to benchmark two important measures of any law department: spend and staffing to revenue.

According to the latest Hildebrandt benchmarking survey (Executive Summary, pg. 3) "median total legal spending as a percent of U.S. revenues is 0.44% among all participants." Of its worldwide revenue of approximately $28 billion, something like 40 percent of that was generated in the United States, which means approximately $11 billion. Therefore, DuPont?s total global legal spending would be a touch above two percent of its US revenue.

If worldwide revenue is made the denominator, DuPont?s legal spending as a percentage of that revenue is 0.79 percent, double the Hildebrandt median. And DuPont, with its enormous size, might be expected to produce a better-than-average cost/revenue profile (See my posts of May 4, 2005: total legal spending as a percentage of revenue declining as revenue increases; and Dec. 3, 2007: possible explanations.).

As to its staff, With 195 lawyers, the legal spend per lawyer is just over $1 million per lawyer. That?s a standard figure, but it may be because DuPont has a bulge of lawyers. At seven lawyers per billion of global revenue, the colossus has a much higher ratio than most manufacturers. The median for manufacturers is closer to three lawyers per billion.

DuPont has a reputation for innovative management of its legal function, but if this back-of-the-envelope analysis is directionally correct, the Wilmington giant?s basic spending and staffing metrics ido not seem to support that renown (See my post of March 15, 2006: questions on some ECA data from DuPont.).

Full post as published by Law Department Management on March 01, 2008 (boomark / email).