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The two hardest questions for general counsel to measure and answer: productivity and value

“How do I measure the productivity of my department?” “How do I measure the value I add?” If I could tell general counsel how to quantify their answers to these two vital questions, which would mean I could tell them how to do better on both, I would be, as they say, in fat city.

That I am not testifies to the impossibility of answering either question definitively, with provable metrics. Which is not to say law department leaders should surrender.

One partial answer on productivity is to demonstrate that the total cost of legal expenses to the company trends at or below growth in the company’s revenue. Stated differently, if the law department holds the line on all varieties of legal expenditures while the company grows, something has become more productive (See my post of April 27, 2006: services sciences.).

Two partial answers for value delivered come from (i) client satisfaction scores honestly obtained and objectively presented and (ii) a consistent and appropriate gap between the hourly costs of inside lawyers and outside lawyers who provide at least roughly similar services (See my post of May 3, 2008: how to think about the hourly cost gap.).