Law Department Management

Part X of a collection of embedded metaposts

Here are ten more embedded metaposts with links (See my post of June 11, 2008: Part IX.). In the parenthesis is the date of original posting along with the number of references cited.

1. Alignment with clients (See my post of June 15, 2008 – 16 posts.)

2. Core team II (See my post of July 17, 2008 – 11 posts and reference to 7 earlier.)

3. Diversity (See my post of June 17, 2008 – 29 posts.)

4. Morale (See my post of July 13, 2008 – 15 posts.)

5. Neuroscience/brain (See my post of June 22, 2008 – 32 posts.)

6. Offshoring/offshore (See my post of June 25, 2008 – 27 posts.)

7. Outside counsel guidelines (See my post of July 7, 2008 – 16 posts.)

8. Paralegals (See my post of June 22, 2008 – 18 posts.)

9. Priorities (See my post of June 26, 2008 – 6 posts.)

10. Processes combined (See my post of July 13, 2008 – 26 posts.)

Three points regarding your law firms if you want them to work on fixed fees

Most partners need considerable nudging from their clients if they are going to commit to fixed-fee billing. An article in the ABA J., Vol. 94, July 2008 at 26, gives three suggestions.

Choose services that are amenable to fixed fees (See my post of March 1, 2008 – 36 references to fixed fees.). The example given in the article is immigration law, “where flat-fee billing is the industry standard from boutique to multinational giant” (See my post of June 17, 2008: real estate services.).

Choose services where the law firm can analyze years of its bills and thereby propose a reasonable and reliable fee arrangement (See my posts of Feb. 19, 2007: “data mining”; and Feb. 24, 2008: analytical tools of law firms.).

Choose firms that will bill on a fixed fee but also track their time and submit it. Even with a fixed-fee arrangement, the department needs to receive and review bills (See my post of Sept. 13, 2006.). I mention this mostly because the article states that one firm, having moved to fixed-fee billing, adamantly refuses to “secretly” keep time. That may be fine for the firm, but not for the law department that wants to know how long tasks took so that it can re-bid the services later and use the billing information to inform its competition.

More horses for courses: clients can choose the best match of personnel within a law firm

McDermott Will & Emery announced it has created a permanent class of staff associates: “lawyers who will be paid less, work less (though still be full-time) and be billed out at a lower rate than the firm’s other associates.” This innovative offering, described in GC Mid-Atlantic, June 2008 at 15, took some criticism in the article, mostly that staff associates will be viewed and treated as second-class, as intellectually damaged goods.

I commend McDermott Will. The more that clients can choose which type of person will do which parts of assignments, the more cost effective the representation. Already law departments can turn to contract or temporary lawyers, offshore resources, non-equity partners, paralegals, secondees and specialists, each of which class of persons travels with assumptions by others about their cost-value ratio as well as their abilities and relative quality. The Rees Morrison blogometer registers many hits on each of these categories of workers:

Contract or temporary lawyers (See my posts of June 14, 2005: retaining former employees as contract lawyers; July 14, 2005: temporary staff; Aug. 5, 2005 and April 9, 2006: differences between contract lawyers and temporary lawyers; Oct. 8, 2005: two contract lawyers at Dial Corporation; Jan. 10, 2006: cost comparisons on temporary staff; Jan. 30, 2006: Purdue Pharma’s use of contract lawyers; Aug. 2, 2006: Sears’ experience; Aug. 2, 2006: 20 contract lawyers with the State of Massachusetts; Nov. 26, 2006: contract lawyers and benchmark metrics; Dec. 17, 2007: temporary and contract lawyers; and Feb. 27, 2008: fees owed placement agencies when temporary lawyers are hired.).

Offshore workers (See my post of June 25, 2008: 27 references to offshoring.)

Non-equity partners (See my post of Sept. 5, 2005: non-equity partners.)

Paralegals (See my post of June 22, 2008: 18 references to paralegals.)

Secondees (See my posts of Sept. 21, 2005: secondments and non-hire agreements; Oct. 26, 2005: reverse secondment of paralegals; June 13, 2006: bilateral secondments; and May 23, 2008 #3: an article on secondments. As noted on this blog, at least six law departments have brought on secondees (See my posts of Sept. 25, 2006: Minerals Technologies; Oct. 30, 2006: Ikon Office Solutions; Feb. 25, 2007: SAB Miller; Feb. 25, 2007: Pfizer; Oct. 21, 2005: South East Water; and Jan. 23, 2008: Starbucks.).

Specialists. Many other roles have evolved to fit specialized needs or cost constraints (See my posts of June 27, 2007: timekeepers other than partners, associates and paralegals; June 24, 2007: project managers in law firms and references cited; Oct. 21, 2005: litigation support consultants in firms; and Jan. 19, 2008: a vast array of other timekeepers.).

Four fundamental questions to answer when the lawyer responsible for a matter reviews an invoice

Bill approval is a pain in the neck. That said, if an inside lawyer wants to focus his or her attention, answer these four questions about a bill.

A. For the results and work accomplished during the month, do the fees seem reasonably related to the value delivered? This is the ultimate conclusion that only the responsible lawyer can assess. Everything else nickels and dimes at the edges (See my post of May 1, 2006: sometimes inside lawyers are not expert enough to assess value.).

B. Are there occasional billers – drive-by billers – whose contribution was not likely to be worth the fees (See my post of Jan. 21, 2008: exclude timekeepers with driblets of hours.)?

C. Did some lawyers spend too much time on tasks that they should have delegated (See my post of March 9, 2007: not enough use of paralegals by firms.)?

D. Do there seem to be too many instances of superfluous people at meetings or on conference calls?

If lawyers in charge would diligently attend to these four questions, and refuse to pay firms when invoices transgress, bills will drop significantly.

Law department attendees at conference flail law firms on efficiency – who’s to blame?

Attendees at a recent conference excoriated their law firms on efficiency. Voting on electronic pads with a scale from 1 low to 5 high, “87% of them gave their law firms a 1 or 2 on efficiency and not a single in-house lawyer rated them a 4 or 5 for efficiency,” as stated in a press release by the Association of Corporate Counsel, dated June 30, 2008,

Why are those law departments hiring law firms that fall dispairingly short on efficiency? Why are invoices from those firms not slashed drastically to reprimand the firms and bring fees into line with efficiency and value delivered? If the lawyers outside are so monumentally wasteful of time, why haven’t law departments hired more lawyers inside so that they can handle the work more efficiently? If inside counsel can spot inefficiency that is so glaring, why haven’t they trimmed it?

Those who check off a box on a survey can decry the situation, but very little indicates to me that law department lawyers act on the sentiment expressed by these particular answers (See my post of Sept. 17, 2006: actual vs. espoused or expressed beliefs.). In fact, most law departments grumble about costs but stick with the same lawyers and their efficiencies year after year.

Remove compliance and ethics from the law department

"It's best not to position compliance and ethics people in the law department, says Joseph E. Murphy, counsel at Compliance Systems Legal Group and author of Building a Career in Compliance and Ethics (Society of Corporate Compliance and Ethics, 2007).” I have felt that one reason for this separation is that compliance professionals feel like they are second-class citizens around lawyers (See my post of March 26, 2005: second-class citizens; May 20, 2005:merging compliance and law under the GC; July 31, 2005: law and compliance housed together; Sept. 27, 2005 #4: Merrill merges the functions; April 15, 2007: compliance and its reporting lines; and Dec. 2, 2007: why it is best to separate the two functions.).

Following this quote in GC Mid-Atlantic, March 2008 at 13, Murphy recommends that law departments “hire non-lawyers to implement and run the compliance department; have a manager who is not acting in an attorney role (although the employee may or may not have a law degree) to oversee ethics and compliance, and also have one in-house counsel to oversee the legal angle.” Much of compliance is execution, not interpretation of laws and regulations, so compliance is ripe for non-legal management.

Admirable characteristics of a medium size law department regarding talent

A profile of Respironics’ general counsel, Steve Fulton, has dotted throughout four commendable people practices in his department.

Strong hires and strong retention. During Fulton’s 13-year tenure, “I have never needed to terminate an attorney and none of the attorneys I hired has left” as quoted in GC Mid-Atlantic, June 2008 at 8 (See my posts of Dec. 12, 2006: low attrition in UK legal teams; March 4, 2007: rates of departure; June 24, 2007: blame the general counsel for high attrition rates; and June 15, 2008: Qwest lowers its attrition rate.).

Experienced, mature lawyers. Respironics’ four transactional attorneys average 17 years of experience.

Autonomy for lawyers. Work comes from clients to the individual attorney, rather than coming to Fulton to parcel out. This system allows the attorneys to build relationships with what are in effect their own clients. General counsel should not be the primary clearinghouse for work assignments.

Keep good work inside. The Respironics legal team does nearly all of the company’s legal work inside. The exceptions are international work and litigation (See my post of July 11, 2008: autarky and Respironics.). Keep good work inside and you keep good workers inside.

My worry at the core of the core-team concept

To push your primary law firms to assign a handful of lawyers to handle a large portion of your work impresses me as a sound practice. I refer to those lawyers as the core team (See my posts of Aug.28, 2006: 7 references cited; and May 2, 2007.) and submit that the benefits to the law department are the familiarity of the team members with the company, their dedication to better service because they feel more involved, and the greater value they because of both reasons. I published an article on core teams for matters handled by law firms.

Troubling me, however, is the worry that billable hours by core-team members on your matters expand to fill the available time. In other words, if you are part of a core team on a large matter and you haven’t been assigned to matters, won’t you somehow find a way to reach your quota of billable hours? Won’t you fill your day, every day, with activities that you record in the time and billing system – but does the client obtain commensurate value for those activities?

This fundamental downside of core teams is that in the valleys of work, the billable hours keep piling up. No, this pattern isn’t inevitable, but it is likely. One way to ameliorate this concern is to obtain from the law firm data on what percentage of each core member’s time was billed to you during the month. Lawyers busy on matters of other clients are less susceptible to bill padding (See my post of Oct. 20, 2005: ask for data on total hours billed by key lawyers.).

Since my first compilation of posts on core teams in law firms, this blog has amassed a number of others on the topic. A handful notice the topic of practice-group management by law firms (See my posts of July 19, 2007: practice-group management in law firms; and Nov. 11, 2007 and Sept. 17, 2006: roles of client-service teams.).

Other posts move toward economics (See my posts of May 23, 2007: blended rates for teams; June 27, 2007: Pareto’s Law and team billings; Dec. 17, 2007: the effects on team size of rate freezes; Feb. 4, 2007: a heavy-handed method to enforce; and Jan. 23, 2008: deep discounts on non-core members.).

And, as usual, some hard-to-classify posts appear (See my posts of Nov. 22, 2007: data on the opposite of core teams; Aug. 4, 2007: presentations by the core team during the selection process; and Nov. 6, 2007: concentration of time by firm timekeepers.).

Who cares if parochial, junior lawyers opine on global growth and its affect on legal work?

I bump into metrics and I can’t resist probing them. For example, a press release by the Association of Corporate Counsel, dated June 30, 2008, announces that “global growth drives agenda of in-house lawyers in top companies.”

I couldn’t help trying to figure out whether we should rely on that sweeping conclusion. The first paragraph says that “more than 100 senior corporate counsel” were polled at a recent conference so I assume 100 is close enough, as promoters always give the highest number possible. The conference used an audience response system (electronic voting pads and software) to survey the attendees. Of the attendees, “36% were counsel of companies with more than $10 billion in revenues, and 34% with $1-$10 billion in revenues.” That means that one third of the lawyers – presumably 30-35 of them – work in companies with less than $1 billion in revenue. Companies of that size are unlikely to be deeply immersed in global transactions and the attendant legal problems.

Moreover, “85% of the respondents were corporate counsel, with 62% in a chief legal officer (CLO) role or a direct report to the CLO.” But that means four out of ten of the corporate counsel do not report to the CLO, so they were presumably more junior lawyers and therefore endowed with less perspective on the company and its preparedness for global legal issues.

Additionally, the release does not indicate whether the CLOs at the conference were with the large companies or the small companies.

For all we know, junior lawyers from huge companies mixed with general counsel of small companies, neither of which have the depth and perspective to give informed opinions about global growth and how it shapes legal workload. As a connoisseur of reliable metrics, I mistrust broad statements made on what could well be an unreliable set of data.

Rees Morrison’s Morsels #75 – additions to earlier posts

Surely no sip of the tongue on coffee and cognitive ability. From Fast Co., June 2008 at 39: "A decade-long European study found that men who drink three or more cups a day suffer less mental decline in old age than nondrinkers." I trust this finding applies to women also. Law departments, fire up your espresso machines for your veterans (See my post of Dec. 19, 2007: grounds for insight.)!

Consolidate through one firm management of overseas IP firms. Tampico Beverages uses one law firm to manage its trademark specialty firms in more than 50 countries. The US-based law firm is responsible for engaging and managing those firms and Tampico receives a single consolidated invoice, according to ACC Docket, Vol. 30, June 2008 at 48 (See my post of Dec. 3, 2006: national coordinating counsel and their benefits.).

Benchmark for patents as a function of R&D spend. An article in the Harv. Bus. Rev., Vol. 85, June 2008 at 132, gives advice to companies that want to repulse patent trolls. The fifth piece of advice is that “Companies must stop flooding patent offices with insignificant inventions.” The authors state that the number of patents per R&D dollar spent is increasing. Sounds like a useful benchmark for law departments (See my post of July 10, 2007: metrics that patent counsel should know.).

MS in Legal Studies. Kaplan University offers a new Master of Science In Legal Studies, designed to give non-lawyers more in depth knowledge of the law, according to GC Mid-Atlantic, March 2008 at 13 (See my post of March 19, 2006: paralegal degrees.).