In-house efficiency measure remains elusive

By James Barnes

16 January 2013 at 10:47 BST

Assessing the value of a corporation's legal function is as easy as nailing jelly to a wall, a group of leading in-house lawyers recently concluded.

Difficult to get it round a legal department

According to Australia’s New Lawyer website, a discussion held by legal services provider Plexus late last year sparked debate that left high-profile in-house lawyers perplexed.
Managing director of Plexus Andrew Mellett said there was a general feeling among in-house lawyers that there is a lack of sophisticated methods to measure the value of corporate legal departments. ‘It was agreed that the value of the in-house legal function is hard to measure, although most participants suggested they would like to be able to demonstrate and measure the value of their in-house team,’ added Mr Mellett.

Linking spending

The discussion was attended by seven prominent in-house lawyers, including two from leading Australian telecommunications businesses -- Simon Brookes, the deputy general counsel at Melbourne-based Telstra, and Jenny Rees, the general counsel with Sydney’s SingTel Optus.
A number of current methods were discussed – including linking legal expenditure to capital efficiency metrics, or quantifying the amount saved on external legal spend through a blended rate calculation.

Strategic objectives

However, the best method was deemed to be the use of a management by objectives formula.
‘This was the method that seemed to strike most of a chord,’ commented Mr Mellett. ‘It was felt that this provided a measurement of achievements around strategic objectives and ensured that those strategic objectives are also supporting critical business objectives.’


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