Posted by: johnocunningham | March 22, 2009

Communicating The Value Of Legal Service

In recent years, in-house general counsel have responded to pressures to operate their legal functions like a business, grappling with the concept of just how to demonstrate a “return on legal investment” to their corporate executive teams. Some have also hired professional operations managers to help them develop and track various metrics that can gauge productivity and value, which are essential to measuring return on investment. 


As we enter a new era of incredible cost-consciousness and tight credit, it is a certainty that those law firms and law departments which have embraced the concepts of measuring legal value and return on investment will thrive; and those who fail to do so, will be at a competitive disadvantage. 


But the process of measuring and stating the value of a legal service, which is a predicate to measuring productivity and return on investment, presents a communications challenge that has baffled many. While business people have long dealt with the issue of measuring and stating the value of intangibles (like the value of advertising or new equipment or training programs) lawyers have resisted it for years.


It can be done, however, and great lawyers have the analytical skills, the creativity and the dedication necessary to accomplish this. Some have measured the legal ROI of maintaining a trademark by calculating the sales of branded product minus the sales of identical or similar generic product divided by the legal cost of maintaining that trademark. Some have measured the value of legal training and prevention programs by gauging the average annual cost of various liabilities and exposures (under the ADA, the securities laws, or the Foreign Corrupt Practices Act, for instance) both before and after instituting relevant training and prevention. In defense litigation, some in-house lawyers have attempted to forecast their total defense costs for a case (verdict or settlement plus legal fees) based upon various possible strategies and past experiences. Some have also calculated the long-term “cost” of quick settlement vs. fierce defense by comparing regions or periods where each method has been tried.


Ultimately, the challenge is one of analysis and communications. Lawyers have the personal attributes and skills needed to rise to this challenge. They also have no shortage of consulting groups offering one or more services related to legal measurement, analysis and management. See, e.g.:


So, is there any reason to resist tackling this communications challenge when there are surely business benefits that will accrue to those who do? 




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