Both are tools for management that have distinguished pedigrees. Every general counsel creates budgets and most should seek benchmarks from time to time.

Both offer more insights to those comfortable with mathematics. Percentage change, compound annual growth rates, correlations and other math methods fly in formation.

Both are attacked for definitions, consistency, and methodological purity. If people don’t like the message, they challenge the method.

Both serve better those who are adept with data visualization techniques. Where there are numbers, text lags charts and graphs for getting the message across.

Both add value as they continue over time. Patterns become more apparent and interpretations more reliable when there is a chronological set to examine.

Both can defend each other. Benchmarks can support a budget submission and benchmarks come from budgets.

Both are easier to assemble than to analyze, and analysis is easier than action.

A ten-year-old article said that the median costs of wrongful-termination awards reached $151,800 for men and $75,000 for women (based on 1,700 verdicts rendered between 1988 and 1995). The article is in Admin. Sciences Quarterly, 2000 at 557. Even in 1988 the average cost to defendants of those types of cases reached $80,000.

In today’s dollars, the average total cost of resolution (award plus fees) might be nearing $300,000 (See my post of April 22, 2007: more recent data that outlines lower expenses; and April 23, 2006: jurimetrics myths.).

An advertising supplement by CT Tymetrix in Corp. Counsel, Sept. 2010 at 3, reels off 11 methods by which legal departments manage external legal costs. Experienced, managers of departments know about all of them and will find nothing new, except one: “trial date management.”

Trials are so rare that it seems this is an odd method to control costs, but it certainly makes sense that a logjam of trials at the same time would tax the in-house litigation managers and possibly lead to higher bills from the litigation counsel let loose on their own. Aside from pile-up consequences, I do not know what “trial date management” does to reduce spending.

A piece in Met. Corp. Counsel, Sept. 2010 at 28, offers a stunning metric about the number of invoices Novartis AG’s legal and intellectual property groups cope with annually. The groups work with more than 300 law firms, legal vendors, and IP agents, who collectively snow each year a blizzard of invoices that approach 60,000.

Such an immense volume means that Novartis, or any of dozens of other large departments that accumulate such drifts of invoices, need to (1) automate as much as they can of the process; (2) study the process and understand it; (3) create policies and procedures and educate those who are involved in invoice handling; (4) practice kaizen, and (5) believe in and use mathematical analysis and benchmarking.

Among the 25 most influential people in IP singled out by Intell. Prop., Fall 2010 at 13, three of them loom large in the controversial domain of what some refer to as patent trolls. John Amster, the CEO of RPX Corporation; Nathan Myhrvold, CEO of Intellectual Ventures; and Paul Ryan, CEO of Acacia Research Corp., all thrive in the underworld of non-practicing entities that own significant portfolios of patents. How they sometimes deploy those holdings may lead to litigation, licensing, or at least anxious looks over the shoulder by patent owners (See my post of March 22, 2010: non-practicing entities with 6 references.).

Intell. Prop., Fall 2010 at 13, honors “the 25 most influential people in IP.” Of that esteemed group, seven in-house lawyers appear. They include Robert Armitage, the General Counsel of Eli Lilly; Terri Chen, Chief Trademark Counsel at Google; Daniel Dougherty, Associate General Counsel and the top IP lawyer at eBay; Michael Fricklas, General Counsel of Viacom; Richard Lutton, Jr., Chief Patent Counsel at Apple; William Patrey, Senior Copyright Counsel at Google (and blogger); and Fred Von Lohmann, Senior Copyright Counsel at Google.

Quite amazingly for a trade journal aimed at lawyers, not a single law firm has a representative. Amidst judges, professors, and government agency leaders, it is a statement of the growing influence of legal departments to have such strong representation as leaders in their field. Lawyers at industry leading companies play central roles at the frontiers of intellectual property.

The columns I write for InsideCounsel every two weeks give me the opportunity to go deeper than my blog posts. I can sit back and think a bit, too, and go deeper.

My posts that point to the columns to date now number 10. They began in May (See my post of June 16, 2010: correlations between inside and outside spending of law departments; June 11, 2010: reasons why benchmark participants may not want to have the name of their company disclosed; July 7, 2010: costs of legal services swing widely in different parts of the world; July 8, 2010 #2: national differences in pay and the effect on total legal spending as a percentage of revenue; July 19, 2010: ratios and correlations; Aug. 3, 2010: methodology to combine internal and external litigation hours into one comprehensive metric; Aug. 9, 2010: the ratio of lawyers per billion is higher in “country departments”; Sept. 9, 2010: many in-house counsel are oblivious to spending figures; and Sept. 30, 2010: normalized metrics;

One more column, about trimmed means and weighted averages, was published on Sept. 27, 2010.

My column for InsideCounsel explains absolute and normalized figures and why normalized figures so importantly contribute to benchmark studies. Click here to read the column.

The columns draws on and goes beyond the following posts (See my post of May 1, 2005: normalize structural analysis of departments; May 28, 2005: normalized various practice area metrics; May 31, 2005: normalizing city and state figures by dividing by the numbers of residents; Jan. 1, 2006: explanation of normalized data; Nov. 13, 2006: another explanation; May 16, 2006: problems when you normalize by number of lawyers; May 26, 2007: adjust number of management initiatives by size of law department; Nov. 22, 2007: two scales on which to normalize litigation benchmarks; Aug. 28, 2008: how to align TLS/Rev across industries; Dec. 23, 2008: lawsuits per billion dollars of revenue; May 22, 2009: total lawyer hours worked per billion of revenue; Sept. 1, 2009: cost-of-living indices normalize compensation figures; Oct. 20, 2009: normalize by logarithm of revenue; and May 24, 2010: take into account tort costs of countries.).

In-house managers of law firms should shift to law firms part of the burden to show whether they are cost effective. How might firms do this? That I leave to the ingenuity of law firm partners but it could start with a quarterly report on value-added activities.

Even if a firm cannot show excellence and value provided, at least the law firm can show effort and procedures. For instance, the lawyers who represent a company meet once a month and consider a checklist of worthwhile efforts they might have done. At least such a procedure raises consciousness.

We all concentrate more on outcomes, but process steps are a good surrogate, on the expectation that processes followed diligently will result in better outcomes. My view about how to push firms to articulate what they contribute starts with their awareness, moves through efforts, and culminates in demonstrable results.

It bothers me that the common refrain goes like this: “Pressure from the CEO or the CFO forces the general counsel to cut costs.” Beyond cavil, the two top executives often mandate budget cuts and what functional head voluntarily signs up for headcount reductions or a lower spending limit? Pressure probably does come more often than not from outside the legal function.

On the other hand, I like to think that responsible general counsel themselves understand prudent stewardship of shareholder assets and act on their duty and desire to reduce costs. They are not porky, puddn’head and profligate; they keep what they believe is the right degree of pressure on law firms to deliver worthwhile services and watch their internal pennies.

My point is that general counsel are not merely and only reactive to demands from the boss or the holder of the purse strings.