Guest blogger: Gian-Reto Schulthess is the author of the German Blog The Business of Law. Until 2011, he was employed with Adecco, where he was head of the Corporate Law Department within its Group Legal function in Zurich, Switzerland. He is an ACC Country Rep for Switzerland.
ACC and Laurence Simons have recently released the brand-new 2012 Legal Department Survey Europe, Middle East & Africa (EMEA). The survey was conducted in spring 2012, and compiles the answers from 114 EMEA legal departments. Of the companies surveyed, 56 percent have their headquarters in Common Law countries (the United States, the United Kingdom and Ireland), while Continental European companies account for 32 percent of the answers.
According to the survey, the average EMEA revenue per lawyer equals € 217 million compared to average worldwide revenue per lawyer of € 215 million. Compared to 2008, the average EMEA revenue decreased (from then € 244 million) whereas the average worldwide revenue increased (from then € 147 million). The survey predicts that this may be a measure of increasing efficiency on a global level, but reflecting the more challenging business and legal environments across Europe since the onset of the financial crisis and economic downturn.
One of the most challenging questions for EMEA GCs is how they should structure their departments to provide efficient and effective legal cover in all different EMEA jurisdictions. The survey reveals that companies have lawyers located on average in six territories. The most common locations are the United Kingdom (36 percent), Germany (29 percent), France (24 percent), Spain (12 percent), Belgium, Switzerland and the United Arab Emirates (all 11 percent). In countries with no legal presence, legal departments use mostly external and internal counsel to provide legal cover. Only 14 percent of the respondents employ qualified internal counsel, compared to 69 percent who say that they have assigned responsibility for such jurisdictions with no presence to non-qualified lawyers.
This confirms my experience and what often evolves from discussions with peers: working as an in-house lawyer can be a truly international job. Business expects that you handle legal issues in different jurisdictions. Legal teams in regional or main headquarters of global firms are often composed of lawyers from different countries. The international aspect is also confirmed by the survey results on languages spoken. The median number of languages spoken at EMEA legal departments is four; the median number for languages in which documents can be drafted is three. Most frequent languages are English, French, German and Spanish.
The survey reveals an average EMEA total legal spend per lawyer of € 914k. 43 percent or € 368k per lawyer of the total legal spend is internal spend, 57 percent or € 482k per lawyer is external spend. This results in an average fully loaded hourly cost per lawyer of € 204. The average €204 hourly rate is a very useful figure. It is not uncommon that GCs of European companies cannot calculate their effective fully loaded cost per lawyer due to insufficient enterprise reporting tools. They can use the average € 204 hourly rate in relation to make-or-buy decisions. Of course, this figure is too imprecise to rely solely on it, but it can well support the decision process and the comparison of internal and external costs for a project.
The average total EMEA legal spend equates to 0.42 percent of total EMEA revenue. This is a clear decrease compared to the 0.56 percent in 2008.
The new survey contains a lot of additional interesting information. It is a valuable source of information for EMEA in-house counsels who want to benchmark their legal departments with peers. Other reports such as the annual ACC Chief Legal Officer Survey are more detailed. However, they are highly US-focused. The new EMEA survey is an ideal complement to these US-centric surveys.
It would be great if ACC and Laurence Simon continue their work on this survey, issuing future updates more often than every four years. The authors of the report might consider including additional data, e.g. on differences between companies with headquarters in the United States/United Kingdom and companies with headquarters in the rest of the world. Also, I would welcome if the results could be presented in more detail and if median values could be included as well. With such changes, future reports could become an even more valuable source for benchmarking EMEA legal departments.