Putting figures to the value of the law department?

Only a handful of law departments attempt to systematically quantify their value to the client. Within the past few years, Telstra Corp., an Australian telecom, hired Gen Group Consultants to measure the value of its law department, including the “intellectual capital” it possessed.

I have paraphrased and shortened a summary of what was done. Can a reader figure it out?

The consultants began by subtracting salaries from the expected market value of key attorneys. How well the attorneys leveraged the department’s intellectual capital was measured by developing categories for significant litigation initiatives, commercial initiatives, intermediate litigation, small claims, and regulatory outcomes. If a matter lasted several years, the consultants used the average cost. Finally, they subtracted work billed by outside lawyers and compared recent matters to previous cases with similar issues to determine time savings. “The number we got represented the overall savings of having the case well managed,” said Christine Morgan, executive general manager of Telstra’s business strategy and operations department.

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