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Benchmark data compares relative performance, which counts for more than absolute performance

An article in the McKinsey Quarterly, 2007 No. 1 at 77, notes perceptively that “in a competitive market economy, performance is fundamentally relative, not absolute.” It’s about how your company stacks up against its competitors. That’s true likewise for general counsel as to their management efforts. Law departments compete with other law departments in their industry.

More generally, a law department ought to benchmark itself against similarly-situation departments, because comparing its performance only to itself is absolute, not relative. Your law department can improve like gangbusters, but if everyone else is improving faster, your relative standing has dropped.

Some company’s base bonuses of their top executives on how well the share price or market cap fares against those of comparator companies. A similar test, using key benchmarks over perhaps a two-year period, could apply to general counsel.

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