Profit per lawyer may be an under-appreciated benchmark metric

Profit per in-house lawyer might be a useful metric on which to compare law departments, if one accepts the reasoning of Lowell Bryan in the McKinsey Quarterly, 2007 No. 1 at 57. That normalizing benchmarking, he would probably say, indicates with some significance legal productivity.

I am leery of this argument because I fear that the term “profit” has an elasticity that only the alchemy of accounting can fix (with a deliberate double entendre on “fix.”). Industries vary widely in their profit margins so there will be little comparability across industries. The numerator is accordingly suspect.

So is the denominator – lawyers – since companies can locate themselves on a spectrum from one in-house manager of outside counsel to virtually no reliance on outside counsel (See my post of Dec. 9, 2005 on the internal gatekeeper to outside counsel.).

We welcome comments

Your email address will not be published. Required fields are marked *