How might we determine whether managerial nous has improved in legal departments during the past two decades or so?
Assuming the general level of managerial skill in U.S. law departments has risen over the past 20 years, how might we detect that progress? One clue could be that the number of lawyers and dollars required to support each billion dollars of revenue has held steady (See my post of April 6, 2011: in-house counsel climb the value curve.). Even with the burdens of increased complexity, scope and size, legal resources per unit of income have stayed stable. Managerial improvement could account for that, but so could increased ability, training, or intellectual aptitude of lawyers wholly apart from how they are supervised and structured. So could cleverer clients or the accumulated reduction of legal mis-steps because of processes, or general awareness.
Clue number two might be that the legal functions of companies have over those two decades absorbed less of the corporate fisc. But that hasn’t happened, if the metrics above hold. Worse, a smaller legal slice of the corporate pie might suggest that CEOs have perceived that the management contribution of general counsel has tailed off!
Third, management consulting to general counsel has perhaps shrunk, which if true might have to do with increased abilities of those who run legal departments. Other reasons might account for this such as more publications, conferences, groups for general counsel – thus making consultants less valuable – or the decline and retirement of consultants without replenishment.
More general counsel could be in the five most highly compensated executives. If so, it could owe to greater perceived value credited to their business advice, not management of the department (See my post of Nov. 12, 2009: estimated only 15% of typical GC’s time on management of the department.).