One of the most difficult aspects of working in-house as litigation counsel is demonstrating value to the company. Put another way, that means making it clear you are more than a cost center. Effective in-house litigation counsel can easily add value to the bottom line. Showing that value, on the other hand, is not that easy. This article illustrates one method of tracking and reporting on the value added by in-house litigation. In short, that method involves tracking the delta between the expected loss from new litigation and the actual loss (or even gain, from, for example, a counterclaim).  That delta can and should represent a type of “profit” provided by in-house litigators. It can also help legal departments that are not already doing a version of such calculations assess the value that outside counsel provides.

The first step, measuring the expected loss from new litigation can be complicated to do right. Generally, an in-house litigator has a long to-do list when a new lawsuit comes in: update stakeholders, initiate a legal hold, secure outside counsel, if necessary, and begin reviewing the merits of the case in earnest.  The latter step represents an opportunity to start quantifying the potential risk involved in losing the case outright, as well as the potential costs involved in litigating that case to “completion” (i.e. through trial and appeal).  Once those numbers are estimated (and it is important to accept that this may be more art than science), they can be multiplied against the likelihood of losing and of litigating the case to the end, respectively (also more art than science).