As a consultant to legal service providers, I am frequently asked to help them enunciate their product’s or service’s return-on-investment. Sometimes this is a formal project, where we create sophisticated ROI calculators; sometimes it’s just helping them to better talk about their value proposition. Almost always, part of the return comes from saving time spent by in-house counsel.
Historically, this time has been valued at an “in-house counsel hourly rate,” basically the annual fully-loaded compensation of the average in-house counsel, divided by 2000 hours. I’ll argue, however, that any time saved by in-house counsel is actually worth the average hourly rate paid to outside counsel, since more efficiency in-house should always result in less overflow work going outside.
Since outside counsel almost always cost more than inside counsel, your technology and other initiatives may be worth more than you think. [Brad Blickstein, Blickstein Group, on legal service providers]
(See my posts of July 31, 2005 on implausible ROI estimates; May 1, 2005 on bill review software and ROI; and May 14, 2005 on knowledge management ROI. Also see my article on the ROI of major initiatives.)