This year’s survey is officially OPEN! Click on this precious link to complete your response. You will relish the streamlined questionnaire, 26+ industries, five releases, medians for 25 key metrics, and the zero cost.

For your industry to be well represented, please forward this post by e-mail to your colleagues and peers. Make some noise, fans, and help GCM get 1,000 participants!

Not many law departments calculate rolling averages, such as for what they spend per month on outside counsel, but it is a useful tool to show up-to-the-month patterns in time-interval data. Rolling averages can show your progress since they convey recent trends rather than overall averages. I write about rolling averages and how to calculate and display them in my Morrison on Metrics column, published Jan. 30, 2012, with InsideCounsel.com. The full column about rolling averages is available online.

Among the approximately 80 law departments analyzed for this post from the ALM survey, not surprisingly almost 6 percent of the total positions were General Counsel or Chief Legal Officer. That means about 90 GCs of CLOs among the 1,510 lawyers covered by the group. Another 11 percent of the positions were identified as Deputy General Counsel, Assistant General Counsel or Divisional General Counsel. We might think of them as the “direct report level.” The Managing Attorney level had 12 percent of the lawyers while the High-level specialists accounted for 10 percent. Out of the entire group just under 60 percent were Senior Attorneys, Attorneys, or Staff Attorneys.

In short, of this large group of in-house lawyers, the levels cluster into four: the top lawyer, twice as many who might be deemed direct reports (even though a typical General Counsel of a large enough department has between five and nine direct reports), other managing attorneys, and somewhat more than one-half of the attorneys ranked as non-managerial below them.

To learn more about the Law Department Metrics Benchmark Survey of ALM Legal Intelligence, click here for ALM’s website.

While not a fundamental benchmark for law department managers, lawyers per thousand employees may be one that is of interest to some. Based on ALM data from about 80 law departments, their median figure was 1.9 lawyers for every thousand employees. The average was much higher, because of a few lawyer-heavy participants; dropping the three highest left the average at eight. Note that these metrics are from U.S.-based law departments so at least the findings are not muddied by differences between countries.

When the data was sorted by the revenue of the participating companies, no apparent pattern stood out. In other words there did not seem to be any clear increase or decrease in the number of lawyers per thousand employees as the amount of company revenue changed. As is apparent, many factors determine the headcount of a company so it is not disconcerting that the correlation with its legal staff appears to be slim. To learn more about the Law Department Metrics Benchmark Survey of ALM Legal Intelligence, click here for ALM’s website.

An interview in Corp. Counsel, Dec. 2011 at 17, with the former general counsel of Apple describes how challenged the law department was when the company launched the iPhone in 2007. Dan Cooperman was then in charge of the “100-lawyer department.” During its fiscal year 2007, Apple’s revenue was about $25 billion, which means this high-tech, cutting edge and iconic company had only four lawyers for every billion dollars of revenue!

That ratio is quite low for a technology company, especially one of Apple’s aggressiveness and clout. The General Counsel Metrics benchmark survey found on 2010 data that 67 Technology companies had a median of more than twice as many lawyers as Apple for every billion in revenue. Something seems to be off about the quoted size of Apple’s core lawyers.

Unfortunately, very little is on this blog about Apple’s legal team (See my post of May 15, 2009 #2: no performance evaluations; Sept. 30, 2010: Apple’s chief patent counsel lauded; and Jan. 17, 2012: Chipsters member from Apple.). Accordingly, it is possible that whoever wrote the article in Corp. Counsel mis-quoted the number of in-house lawyers, or perhaps that is the corporate group and there are business lawyers not accounted for. Or, perhaps Apple is very leanly staffed and relies heavily on outside counsel.

At various times I have written about benchmark metrics based on the market capitalization of a company, earnings per share, total shareholder return, or return on equity. An article in Acad. Mgt. Rev., Dec. 2011 at 1126, faults such stock-market based metrics when you look at the effectiveness of corporate executives and boards: “In general, accounting measures such as ROA are considered to reflect the influence of internal management better than market-based measures, which are more subject to exogenous economic factors.” Return on Assets (ROA) is calculated as net income over total assets, and researchers use adjusted or unadjusted ROA figures (See my post of April 24, 2009 #5: various benchmark denominators.).

The criticism makes sense to me and applies to general counsel benchmark metrics. Many things influence a stock’s price other than what management, including the general counsel, somewhat control by way of key corporate decisions. Accordingly, look at measures for benchmark denominators that focus on the internal allocations of people and resources, such as assets leveraged to generate income.

A few days ago my online column appeared at InsideCounsel.com. It offers thoughts on scatter-plots (aka scatter-grams). They and their usual sidekick, trend lines, provide a compelling way to present a lot of data so that some message from the pattern comes across immediately. If you want to read the full column, published on January 16, 2011, click on this scatter-gram link.

If general counsel understate the cost of an in-house attorney hour, perhaps by assuming a high number of chargeable hours a year or only including base salaries, they are mistaken. In the ABA J., Jan. 2012 at 26, for example, a general counsel of a huge real estate management firm “notes the average cost to employ an experienced in-house lawyer is $125 an hour, a bargain compared to many firm rates.”

Actually, for U.S. law departments, according to 478 who are in the final release of the General Counsel metrics benchmark survey, the fully-loaded figure is $193 (assuming 1,800 chargeable hours per year). Thus, the quoted general counsel operates on an assumption approximately 50 percent too low. Even more, he mentions “experienced” in-house lawyers, who probably turn over the meter even faster.

The Fifth Release of the GC Metrics global benchmark survey will go this week to 829 participating law departments. That is a record increase of 24 from last year. There are now 27 industries detailed, with the addition of special analyses for airlines, automotive suppliers, medical devices, national labs, semiconductors, certain manufacturers, and others. Thirty-four countries are represented among the group, with the United States (510 departments), France (112), and Canada (53) leading the way.

You can still get the Release if you submit your company’s data online between now and February 15th when the 2012 survey – asking for 2011 data – will open. Here is the survey link and all you need do is answer the six data questions:

• the number of your lawyers, paralegals, and other staff as of Dec. 31, 2010;
• your internal and external legal spend during fiscal 2010; and
• your company’s revenue during fiscal 2010.

There is no cost to take the survey or get the 65-page Fifth Release report with its 25 key benchmarks.

Wading through survey rankings by law department managers of why law firms are reluctant to embrace alternatives to hourly billing, I dutifully listed the results in declining average rank order. Having done so, I was struck by the uneven gaps between some of the rankings. In fact, as I calculated the percentage difference from the highest ranked explanation to the second highest, I realized that among the nine choices, three clusters presented themselves. Each cluster of two or three reasons had a large percentage gap between it and the adjoining cluster.

The gaps between some of the average rankings highlighted how dominant the respondents thought the highest ranking reason was. The gap to the next reason was 33% of the highest score. Reasons two and three were in a dead heat so they formed a cluster. Then there was a 20% gap to the fourth-ranked reason, which stood very close to the fifth, as a cluster. The final item, ranked lowest, was off the chart low. I think this method of gap analysis has much promise.