To find out whether lawyers per thousand employees makes any difference in total legal spending. I took data from 39 US and Canadian manufacturing companies that participated in the General Counsel Metrics benchmark survey last year. For each I calculated the number of lawyers they had per thousand employees – a median of exactly one. Thus, a manufacturer with 1,000 employees if typical for this group had one in-house lawyer. The average stood higher, at 2.4 lawyers per 1,000 employees.
Then I calculated total legal spend as a percentage of revenue. The median for the group was 0.41% while the average was 0.52%.
The correlation between the two metrics was very slightly negative at -.04, which suggest very slightly but not very reliably that the more lawyers as a percentage of employees the less the company spends on legal. In-sourcing makes economic sense.