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.”
In December, a survey by the Australian Corporate Lawyers Association and the University of Technology Sydney found that 35 per cent of general counsels with ASX 100 companies were listed as key management personnel.
The average remuneration package for general counsels classified as key management personnel was $1.22 million, more than double that of the average general counsel salary for general counsels with ASX 100 companies not holding a key management position.
Hey, Government, leave us lawyers alone
Mellett also reported that there was general agreement that corporations don’t need more regulation, with the respective demands from different regulatory bodies making the formation of compliance polices a more complicated and cumbersome process.
“There is no doubt there is a feeling there is over-regulation, but of even greater concern is that it’s fragmented regulation,” said Mellett. “Not only do they happen to address new regulation and new forms of regulation in different markets, but the weight in which different regulators address different issues is fragmented and is causing confusion and complexity in the business.”
The in-house lawyers also discussed how the rise of global data and use of technology is creating threats and opportunities.
One general counsel at the discussion relayed the story that they put forward a business case that demonstrated a 1000 per cent return on investment, but that still did not secure IT resources because of “crowding out” by other projects.
Despite that, the consensus among the seven senior in-house lawyers present was that there were potential benefits to IT teams via technology for document management, automation and knowledge management.
Plexus plan to host a similar seminar featuring a select group of in-house lawyers in Melbourne on 14 February.