Unsurprising but hard to believe: administrators say how much they save their departments

Talk about a risk of bias in survey data! A survey by administrators asked a group of law department operations managers in US legal departments “How much do you think your company’s legal spend would increase without a legal department operations position?” In other words, how much are you worth to your company? The results from the Second Annual Law Department Operations Survey at 6 should not surprise us, but the grandeur of the amounts should.

A third of the respondents thought that legal spend would otherwise rise 15-29 percent and a quarter, less modest, saw spending without their oversight would soar 30-59 percent. Goodness gracious!

How might that translate into dollars and ROI? Assume the average size of the legal departments for the surveyed group was 20 lawyers, which is probably much too small but a department has to be of some heft to support such a position. If we further estimate a million dollars of total legal spend per attorney, then the total spend would be $20 million. Saving somewhere between 20 and 35 percent of that amount – which is very roughly what half the respondents projected, would mean savings of $4 million to $6 million.

Compensation for administrators of this caliber could be on the order of $300,000 a year when you combine overhead and all compensation and benefits. That means the return on investment for an administrator starts at ten to one or about one month. Goodness gracious once again!

My point is not that administrators (operations managers) don’t bring sufficient value. They absolutely do. I strongly recommend that large legal departments have a capable and empowered person to take care of the non-substantive legal needs of the in-house lawyers. But to quantify the return on that investment from this data should leave wide-eyed incredulity.

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