If the lawyers of a law department track their time, what constitutes “chargeable time” has some degree of subjectivity (See my post of May 16, 2006: “Count time as ‘chargeable’ when you are working on any project for or requested by your client, but not if you are doing something that members of the law department do to maintain its operations, such as evaluations of law firms or members, software selection, CLE, professional development, staff meetings, retreats, budgeting and other administrative or organizational activities.”). Even if in-house lawyers do not track their time, some of their hours are not devoted to practicing law.
A missing metric in our field is time spent by lawyers to maintain the operations of the department. Partly that is because some tasks might be deemed internal to the legal department and not chargeable, such as status reports sent up the line or evaluations of law firms that work only for a particular client or budget reports prepared for a client; alternatively, they might be deemed chargeable if specifically incurred for a particular client.
In any event, it seems plausible that at least two hours a week for a typical in-house lawyer goes to activities that neither law firm nor an in-house attorney would (should) charge for. Five percent of overhead time should not shock anyone for non-billable time, and may well be too low, especially for senior lawyers in law departments who bear management responsibilities.