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.).