Legal Department Expense as a Percentage of Total Revenue

Legal Department Expense as a Percentage of Total Revenue

KPI Details

Legal Department Expense as a percentage of Total Revenue measures the expense incurred by the Legal Department in relation to the total revenue generated by the company over the same period of time. Higher than average values for this metric can be indicative of highly manual (i.e., error and rework prone) Legal Department processes and procedures (e.g., poor use of document management systems, etc.), excessive time spent on low-value work (e.g., printing, scanning, etc.), overstaffing, general inefficiencies within Legal Department processes (e.g., inefficient distribution of corporate governance policies to employees, poor management of company intellectual property, etc.), and sub-par Legal Department employee training and performance. While companies typically seek to streamline operations and employee positions to reduce expenses in the Legal Department, great care should be taken when doing so as too many layoffs may make it that much more difficult for the company to successfully mitigate any legal issues that may pop up.

KPI Definition

The expense incurred by the Legal Department divided by the total revenue generated by the company over the same period of time, as a percentage.

KPI Calculation Instructions Legal Department Expense as a Percentage of Total Revenue?

Two values are used to calculate this KPI: (1) the expense incurred by the Legal Department, and (2) the total revenue earned by the company over the same period of time. Include labor (wages, salaries, commissions, benefits), overhead (occupancy, utilities, supplies, advertising, legal fees, travel costs, etc.), and technology (hardware, software, end-user operations, etc.) costs in the numerator. Include employees in all of the Legal Group’s sub-functions (e.g., Corporate Governance, Government Affairs, Intellectual Property, Legal Administrative Support, Litigation Management, Mergers & Acquisitions) in this calculation. Include the expenses incurred by all of the Legal Group’s sub-functions (e.g., Corporate Governance, Government Affairs, Intellectual Property, Legal Administrative Support, Litigation Management, Mergers & Acquisitions) in the numerator.

KPI Formula :

(Legal Department Expense Incurred / Total Revenue Generated) * 100