Law Department Management Blog
Various posts on this blog discuss metrics and take inflation into account (See my post of April 27, 2006: effective hourly rates of the plaintiffs’ bar; May 31, 2005: growth of civil legal spending by Canadian businesses; Dec. 5, 2007: median revenue of a survey population 15 years later; April 1, 2009: median damages in patent litigation; June 24, 2009: the money illusion; and Sept. 28, 2009: legal fees and inflation over time.).
Almost always, when general counsel present figures that are more than a few years old, they should adjust those historical figures for the distortions of inflation (See my post of Dec. 31, 2006: adjust figures for inflation; and March 12, 2006: nominal and inflation-adjusted figures.). Otherwise, to say something like “we paid rates to our best law firm of $200 an hour in 1995” misleads the casual listener or reader unless you add “which in 2009 dollars is $310 [or whatever the inflation-adjustment says].” Benchmark surveys should also normalize past financial figures to current inflation-adjusted amounts.