To benchmark legal departments about litigation, two key metrics are likely to be the number of cases pending and the number of full-time equivalent litigation lawyers. As I explain in this column, both of them are problematic but in the end I would recommend the FTE figure, with an adjustment.
Litigation cases pending sounds so innocuous. If you asked a hundred law departments to give you their figure as of the last day of the year, you would think you could confidently rely on the numbers. Not so. One humongous case, such as a class-action, costs more and consumes more resources than hundreds of nuisance cases. Moreover, do they count every slip and fall case as a separate matter? What about cases that arise and are completed within the calendar year and are no longer pending on the last day of the year? Do you count workers compensation claims as cases; or more fundamentally, is the definition of case when a complaint is filed in federal or state court? And then there is the variability of dormant cases that have been virtually forgotten. Then too, some companies aggressively resolve disputes while others contest a higher portion of them.
The number of lawsuits pending for a company also depends on whether the company manufactures products, let alone products that harm people. It depends on whether the company deals directly with the consuming public, in a litigious lot, or mostly with other businesses. And, of course it depends on the statutory, regulatory and case law environment that pertains to a company. Probably the best way to benchmark is to ask for the number of cases where spending was more than $20,000 (or some plausible figure) during the previous 12 months.
With such difficulties affecting a count of cases, it might seem immediately clear that counting bodies yields more reliable metrics. If one lawyer worked full time on managing litigation in-house and another lawyer worked approximately one third of her time, that would be 1.3 full-time equivalents (FTE). They might handle 10 cases or they might handle 200, but their time translated into lawyers who work all year round would be reasonably reliable.
Not quite so fast. Some low-level litigation falls to business lawyers to handle and it may be difficult to get a handle on how much time they spend on litigation. Second, if a law department has a complement of litigation paralegals, litigation managers, in-house litigation support personnel and other non-lawyer litigation staff, is the measure still accurate that only focuses on the number of practicing lawyers?
Perhaps an even better measure would be a full-time equivalent figure for everyone who is involved in litigation in the law department.
If a law department had its FTE litigation staff number, a further refinement of the benchmark would be to convert all of the outside counsel hours devoted to litigation into a single figure. If you divide that figure by, say, 2000 hours, you have now created a figure for full-time equivalent outside counsel. You could go further and add in law firm paralegals. The combined full-time equivalent inside and outside, I submit, would be a better benchmark metric than the number of cases pending.Rees Morrison, Esq., a management adviser to general counsel, is the founder of General Counsel Metrics LLC. For more information, visit LawDepartmentManagementBlog.com