It’s your company’s “budget season,” and for many inside lawyers, that used to mean watching your business clients buried deep in financial numbers, worksheets, trend lines, forecasts and metrics. Today, most law departments, big or small, participate in this ritual along with their colleagues in other business units and departments.
Law department leaders should know and be able to account for every item in their profit and loss (P&L) statement. On the cost side, they should know their internal and external costs. Internal costs often include salary, benefits, travel expenses and overhead for your internal legal staff. External costs typically come from outside counsel and other legal vendors. These costs may reside in the law department’s own P&L, or may be allocated to the respective business units or departments. Regardless, the law department should closely track and be able to explain that legal spend.