Definition
The Total Legal Cost by Business Unit (LCBU) metric tracks how much legal support each department (such as Marketing, Sales, IT, or HR) requires. It provides clear visibility into where legal resources are allocated and what is driving those costs. This helps legal departments demonstrate their contribution to the company’s overall financial performance and identify areas where legal resources are needed most.
Some of the areas that LCBU can be used for:
Financial Forecasting: Reviewing past LCBU data helps predict future legal needs by business unit, improving budget accuracy and resource planning
Strategy Integration: LCBU provides a clear view on the distribution of internal legal resources across the organization, helping legal departments align their work with company priorities.
Resource Allocation: Consistently high legal costs in a unit may signal the need for dedicated legal staff or targeted training to manage expenses more effectively.
Future Targets
Training and Development is a great way to reduce legal costs, especially in business units that need frequent legal support. By helping these teams improve their understanding of basic legal concepts, you can reduce the need for legal involvement in routine tasks. This frees up the legal department to focus on more complex, high-priority matters while cutting down on external legal spend.
Trend Analysis
Tracking legal costs by business unit over time can reveal important trends. For example, a spike in legal costs for a particular department may indicate increasing risk or compliance challenges. Spotting these trends early means legal teams can proactively address potential problems before they escalate into costly litigation or regulatory issues.
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