I believe that to best assess the value of a law department, ask its clients. They know, quietly and intuitively or vocally and explicitly, whether the lawyers help them make money and grow the business. We might refer to that meaning of “client” as the individual executives of a company.
The backdating of stock option grants, with the connivance of the general counsel, forces us to accept that to please individual executives may be to violate expectations of a larger group. Thus, “client” also suggests the company as a whole. Poorly done due diligence on an acquisition may make sense in the short term, but the client/company suffers as undiscovered liabilities or legal issues belch out later.
The third level of “client,” and the most expansive, includes shareholders, the legal profession, and people in the communities touched by the company. Law departments affect these constituencies also, but few people think about this broad circle (See my post of June 5, 2006 about general counsel and their influence on share price.).