Every company relies on its legal department, whether to manage contracts, navigate regulations, protect intellectual property, or respond to litigation. Yet one of the most important questions leaders ask is deceptively simple: How many people does our legal department need?
Benchmarking your legal department? Search database
Unlike sales, finance, or IT, the legal function doesn’t produce easily comparable output metrics. Some legal functions are outsourced, workloads fluctuate, and risk tolerance differs by company. That’s where benchmarking becomes a useful tool. By comparing legal headcount and costs to peer organizations, you gain clarity on whether your department is lean, average, or heavy - and more importantly, whether it’s designed to meet the company’s strategic needs.
In this guide, we’ll explore how to benchmark the size of any legal department, the most relevant headcount ratios, and how organizations can use data to balance people costs, external counsel, and technology. Here’s the full table of contents:
Benchmarking serves as a compass for legal leaders navigating today’s demands. Here are the three core reasons why companies increasingly rely on benchmarks for legal staffing:
Legal is often perceived as a cost center. CFOs want to know why legal spend is increasing and whether it’s in line with peers. Benchmarks - like people cost as a percentage of revenue - provide a common language to defend or reallocate resources.
Benchmarking ensures the legal function scales appropriately with the business. For instance, a $500M tech startup scaling globally may need more lawyers relative to revenue than a $5B manufacturing company with predictable contract volumes.
Benchmarks highlight inefficiencies and areas of over-reliance on external counsel. They also help identify gaps where underinvestment exposes the business to regulatory, contractual, or reputational risk.
Simply put, benchmarking allows GCs and other legal leaders to move from anecdotes to evidence when sizing up their function.
When it comes to legal department size, a few core ratios consistently provide meaningful comparisons across industries and company sizes.
This is the most widely cited benchmark. Large companies often employ fewer lawyers per $1B in revenue than smaller organizations, reflecting economies of scale. For example, a company generating $10B in revenue may employ 30 in-house lawyers, while a $1B company may employ 10 - meaning the smaller company has 10 lawyers per $1B, while the larger company has just 3.
This metric captures the full salary and benefits cost of legal employees relative to company revenue. It’s particularly useful for CFOs who want to understand the cost of the legal function. Note that variations arise by industry, such as financial services, healthcare, and energy which are more heavily regulated. This typically drives the need for more legal employees and higher legal cost percentages relative to lesser regulated industries.
This ratio measures how many employees a single lawyer supports. It’s useful for labor-intensive industries or companies with high HR/legal interactions. A ratio of 1:200 may be reasonable in some sectors, while others aim for 1:800 or higher.
How many direct reports does the General Counsel manage? A flat structure can lead to inefficiency, while too many layers may slow decision-making. In short, Span of Control benchmarks help determine if the structure has the right number of employees reporting into each legal leader.
Not all legal staff need to be attorneys. High-performing departments typically strike a balance between attorneys, paralegals, and legal operations professionals. Benchmarking ratios across these categories helps organizations shift lower-value work to lower-cost resources.
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Sizing a legal department isn’t about blindly copying benchmarks - it’s about using them as guides, as part of a structured process. These are the steps that we recommend you follow:
List the types of matters the department manages: contracts, litigation, compliance, intellectual property, M&A, data privacy, etc. This is important because what a company does impacts its legal requirements. For example, a company that’s heavily engaged in M&A will have quite different needs than one focused on regulatory compliance.
Gather data on current headcount, people cost, external counsel spend, and workload volumes (e.g., number of contracts processed annually). Access and transparency here is critical.
Look at lawyer-to-revenue ratios, people cost % of revenue, and employee-to-lawyer ratios from peer organizations. Identify where you are above, below, or in line with industry standards. Find trusted data with access to our database of +1 million benchmarking data points – Start your benchmark search now.
If benchmarks suggest that you’re over-resourced, consider taking actions like redesigning workflow processes or leveraging more technology and AI in the legal function. If benchmarks suggest that you’re under-resourced, then it’s time to evaluate whether over-reliance on in house counsel is inflating headcount and costs.
Use insights to create a headcount roadmap tied to projected company growth, emerging regulations, or international expansion. This forward-looking orientation will ensure that the legal department is not just reactive, but also ready for future needs.
One of the most critical applications of headcount benchmarks in the legal function is to find the right balance between hiring in-house employees and leveraging external counsel.
In-house lawyers are a fixed cost, but generally less expensive per hour than outside counsel. Benchmarks help determine the tipping point where hiring internally is more efficient.
For niche areas of the law (such as antitrust, cross-border tax, and complex litigation), maintaining in-house specialists may not be cost effective. However, equipped with specific benchmark data you can see how peer companies balance generalists vs. outsourced expertise for their in-house workforce.
Benchmarks can also reveal when companies of a certain size or complexity create specialist roles. For example, a company may setup a dedicated privacy counsel when they exceed a certain employee or customer threshold. This is especially useful for companies that are scaling fast in heavily regulated industries.
Even with strong in-house teams, external counsel remains an essential component of many legal functions. One useful benchmarking ratio is that of internal legal personnel costs relative to external legal spend, which can provide insight into whether you’re striking the right balance.
Explore trusted legal benchmarks specific to your company
Benchmarking can provide valuable insights for sizing your legal department, but it must be done carefully to avoid misleading comparisons and mistakes. Here are some best practices to follow and pitfalls to avoid:
The ultimate goal of benchmarking isn’t just to count lawyers. It’s to design a legal function that supports the business effectively, efficiently, and strategically.
Looking forward, we think that there are several trends that will shape how benchmarks are used:
Sizing a legal department is both art and science. Benchmarks provide the science - ratios and comparisons that reveal how your function stacks up. The art comes from applying those insights thoughtfully, tailoring them to your company’s strategy, risk appetite, and growth trajectory.
The next time someone asks, “How many people should our legal department have?” - you’ll know the answer isn’t a number plucked from thin air. It’s a number grounded in data, informed by benchmarks, and aligned with your company’s unique needs.
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