How can a law department quantify the percentage of work done inside and outside?

“Regression analysis suggests that legal departments will be most efficient when more than half of legal work (55%) is conducted in-house.” For the 161 companies in the 2006 GCR Benchmarking Exercise, the average law department said it conducted 37 percent of its work in-house. How do you measure the percentage of work conducted? If you do not tracking internal time, all you can do is estimate (See my post of Nov. 8, 2005 about measuring total hours of legal advice rendered.). On what basis did the respondent departments estimate the split of their work?

In passing I would suggest that hours worked are not fungible. One hour of a fourth-year lawyer in-house is not equal to one hour of a 20-year partner outside; one hour of the general counsel is not equal to one hour of a first-year law-firm associate. To simply tally hours worked is too crude a calculation.

Don’t these numbers no more than restate the classic 60/40 split of outside and inside spending?