True value of in-house remains a mystery

A gathering of high-profile in-house lawyers has expressed its frustration at the methods of measuring in-house efficiency.

In late November, alternate legal services provider Plexus hosted a discussion on The Future of the Legal Function.

The discussion was attended by seven prominent in-house lawyers, including Simon Brookes, the deputy general counsel at Telstra, and Jenny Rees, the general counsel with SingTel Optus. Also present were: Michael Jackson, the vice president of legal and commercial at Thales Australia; Andrew Harding, an executive director at the Macquarie Bank; Nevenka Codevelle, the general counsel at the APA Group; Rachel Besley, the general counsel of Deloitte, and Grant Smallhorn, the Asia Pacific general counsel at Parsons Brinckerhoff.

Andrew Mellett, the managing director of Plexus, said there was a general feeling among in-house lawyers that there was no elegant method to measure the value of the in-house function.

“It was agreed that the value of the in-house legal function is hard to measure, although most participants suggested they would like to be able to demonstrate and measure the value of their in-house team,” said Mellett.

Participants discussed a number of current methods used by corporations to measure in-house efficiency, such as linking legal spend to capital efficiency metrics and seeking to quantify the amount saved on external legal spend through a blended rate calculation.

However, the current method cited as the best, albeit from a limited field, was the use of a management by objectives (MBO) formula that analyses an in-house legal team’s performance against functional objectives that support strategic priorities

“This was the method that seemed to strike most of a chord,” said Mellett. “It was felt that this provided a measurement of achievements around strategic objectives and ensured that those strategic objectives are also supporting critical business objectives.”