Let me propose a metric to show a law department’s value, based on the degree to which its lawyers are based in countries in proportion to the revenue from that country. In that regard, during the past two years, this blog has commented on several law departments with many locations of their lawyers (See my post of Jan. 12, 2012: P&G with 20 sites; March 28, 2011: Google with 21 and AB InBev with more than 20; and June 8, 2011: Wellpoint with 28 locations.).

The blog has skirted the quantification I am here proposing (See my post of Nov. 20, 2007: global law department if it has 10+ locations outside HQ country; Dec. 31, 2010: the “nerve center” where many specialist lawyers have offices; Feb. 28, 2012: attorney-client privilege headaches of multiple foreign offices; Oct. 17, 2011: dispersed lawyers characteristic of concentrated global industries; and Nov. 24, 2011: law departments of non-U.S. companies are more likely to be geographically dispersed.).

We could measure proximity of counsel to corporate revenue. If the proportion of a company’s revenue that comes from a country (or a region) matches the proportion of its in-house attorneys based in that country or region, the metric would be 1. To the degree that lawyers don’t follow the money, that number will decline (See my post of April 16, 2012: locate lawyers where revenue, and thus legal work, is generated.). For example, if 10 countries each account for 10% of a company’s earnings, but all its in-house lawyers are in one of those countries, the metric would be 0.1.

Deloitte’s Global Corporate Counsel Report 2011 shows a chart, based on data from nearly 900 in-house respondents around the world, of the “Responsibilities of Corporate Counsel.” The data pertains to the various functions general counsel oversee. For each of eight areas of responsibility, the percentage of respondents who have the responsibility increased from the figures of a comparable study five years before. An odd pattern, by all means.

The eight areas include five typical ones and three unusual ones. Regulatory compliance, company secretarial, risk management, ethics or whistle-blowing, and department management are commonly the general counsel’s charge, in addition to legal services.

Much less common, and therefore noteworthy for having been included in the Deloitte study are “directorship of subsidiary,” “strategy development,” and “project management.” If “strategy development” pertains only for the legal team, nothing stands out. But if it broadens to company-wide strategy, I am surprised at the increase. The same interpretive distinction applies to project management. To be a director of a subsidiary is a new responsibility for me to hear about. It confounds me why the frequency of all eight roles has increased.

The veteran consultant Richard Stock wrote a column for the Canadian Corporate Counsel Association’s quarterly, Leading Corporate Counsel, Fall 2010. Summarizing some of the action tips put forth in a metrics study, the ACLA-CLANZ Legal Department Benchmarking Report, Stock cited one on alignment.

“Rotate lawyers’ alignment away from half of their business units every three years for coverage and effectiveness.” I think this means that lawyers who support a commercial group should do so for three years, no more, and then be reassigned to support a different group. The logic might be to deepen the experience of commercial lawyers and to avoid their “going native” (See my post of Feb. 19, 2006: in-house lawyers risk "going native" compared to "independent" outside counsel.).

Others, quite possibly, would disagree with this advice. They want their commercial lawyers to immerse themselves in the legal issues of the business units they support and they would not want to arbitrarily yank them out of that accumulated trust, familiarity, and strategic knowledge.

Deloitte’s Global Corporate Counsel Report 2011 presents data from almost 900 in-house counsel in 10 countries. Only 49 were from the United States. Of that subset, 86% are a member of the company’s senior management team (at 6). Evidently a much lower percentage holds for counsel outside the U.S., since the figure for the entire survey population – increased some by the U.S. figures – was 62%. Hence, the top lawyers of non-U.S. companies for the most part don’t occupy the rank of their American counterparts.

That said, 13% of the total respondents are members of their company’s board of directors, whereas only one of the U.S. corporate counsel is (2%). An earlier survey, drawing mostly on general counsel in Europe, found otherwise (See my post of May 14, 2006 #4: in Canada, one fourth of general counsel sit on Board; Nov. 9, 2006: percentage of Board member GCs was dropping in Europe; Dec. 12, 2007: more than half of UK general counsel want to be a board member; and Aug. 6, 2008: non-US general counsel often do not attend any Board of Directors meetings.). Every now and then this blog has mentioned general counsel in relation to Boards of Directors (See my post of Feb. 7, 2006: "general counsel should report to the board of directors"; March 25, 2009: general counsel of McDonald's sits on the board of directors of Aon Corporation; May 11, 2011: doubts about general counsel serving on another company's Board; Sept. 5, 2011: four benefits when a general counsel serves on the board of another company; and Nov. 3, 2011: reporting line to the board gives the general counsel more independence.).

In the portfolio of John Chou, general counsel and secretary of AmerisourceBergen, fall four groups. The law department includes 21 lawyers and 24 other members. Those 45 are less than half of his total complement because it also includes government affairs, regulatory affairs, and corporate security. All told, the “law department” counts about 110 staff. These demographics emerge from GC Insights: What Multinational General Counsel Value Most (ACC 2012, supplement to ACC Docket) at 12.

The $80 billion pharmaceutical services companies has perhaps the lowest ratio of lawyers per billion I have ever seen for such a huge company. With a quarter of a lawyer per billion, it makes anorexic departments with but a lawyer or two per billion look hefty. That nano-metric deserves some explanation. Might there be a passel of hidden lawyers in the business units? Might outside counsel spending be very high?

My major point, however, has to do with corporate security. That function, I thought, was very unusual to be under the general counsel, although some late-arriving data suggest I am wrong (See my post of March 1, 2012: roughly one-out of three GCs in a survey also ran corporate security.). To my surprise, that post stands alone among the 7,203 published so far as a reference to the corporate security function.

From GC Insights: What Multinational General Counsel Value Most (ACC 2012, supplement to ACC Docket) at 27, we learn about the law department of Ford Motor. It has 146 lawyers and 215 other staff. Among the 361 total people are Ford’s tax lawyers as well as internal audit.

It is unusual for tax lawyers to be part of the legal department as they more commonly report up to the CFO (See my post of March 27, 2009: tax lawyers and reporting with 7 references.). http://www.lawdepartmentmanagementblog.com/law_department_management/2009/03/a-breakdown-of-outside-counsel-usage-by-practice-area.html

It is even more unusual, I suspect, for internal audit to report to the general counsel. Although I hold to that belief, four cites on this blog show counter-examples. Perhaps I wrote about them because they seemed exceptions that prove the rule (See my post of March 26, 2005: risk of two-tiered hierarchy; Oct. 8, 2005: Dial Corp.’s GC runs internal audit; Nov. 22, 2008: at Salomon, a “control function”; April 18, 2009: at EMC, internal audit reports to the general counsel; and Feb. 9, 2010: Clorox GC oversees internal audit.).

An item in the ACC Docket, March 2012 at asian briefings 1, notes that the Asian region of Deere & Company’s law department has grown from two to 20 legal department employees in the past five years. The lawyers for that global company are increasingly placed to match the footprint of the company’s revenue. For the very largest companies in the world, the ones that do business all over, their law department locations and numbers of lawyers at them will eventually line up with where they do the most business.

The exception will be the global specialists, such as securities lawyers and corporate governance specialists, as well as the heads of litigation and intellectual property. They may cluster where the preponderance of senior executives sit – but then again as executives disperse global legal specialists too might distribute geographically and the department as a whole will cover the map.

A point-counterpoint in Lit. Mgt., Spring 2012 at 56, presents the case for and against staff counsel in insurance companies. Favoring staff counsel are “predictability of fees, decreased cycle time and increased trust between claims staff and attorneys handling their suits.” The proponent of staff counsel also argues for them due to their accessibility, depth of knowledge, and cost effectiveness.

Reasons to oppose staff counsel include objections to the unauthorized practice of law – but the proponent says that “most states have rejected these arguments” – and to the ethics of an employee representing an insured – but again, “virtually all tribunals finding that the use of staff counsel is ethically permissible.”

The opponent of staff counsel basically revives the “inherent conflict of interest” between serving the employer insurance company and serving the insured premium payer. Additional arguments in favor of independent trial counsel include breadth of experience, more resources available, and more favorable perceptions by courts and opponents.

Only four posts on this blog have referred to insurance staff counsel (See my post of May 4, 2005: bad blood between carriers and insurance defense firms; Aug. 21, 2005: collusion between insurance defense and plaintiff firms; Feb. 18, 2009: State Farm had more than 500; and June 15, 2011: 50/50 whether staff counsel report to claims or to the general counsel.).

In MIT Sloan Mgt. Rev., Spring 2012, at 19, as a co-author the Director of the USPTO states that “intellectual capital and intangible assets – including technology, brands and strategic competencies – comprise more than 50 percent of the business outputs in the U.S. economy.” If so, wouldn’t you expect IP lawyers to become more crucial and therefore more common? I am not aware that the proportion of all law department lawyers accounted for by IP lawyers has risen. Instead, much of what the article refers to as intellectual capital is dealt with by generalist commercial lawyers.

Elsewhere the authors state that the World Intellectual Property Organization estimated in 2008 that there were 6.7 million patents in force around the world. Wow! The average annuity for a patent could be much more than $1,000, but if it were only that much holders of patents would spend nearly $7 billion a year simply keeping those patents current!

The 2011 In-House Counsel Barometer, produced by the Canadian law firm Davies Ward Phillips & Vineberg In association with the Canadian Corporate Counsel Association (CCCA), covers the responses of 864 in-house lawyers in Canada.

The report states at 9 that “one-fifth (19%) of in-house counsel are sole practitioners in their organization and another 23% report that their law department is comprised of 2-3 lawyers.” Based on that distribution from a large number of respondents, the median size of Canadian law departments would be around 4 lawyers, since 42 percent have 3 or fewer, and one more lawyer will push the cumulative percentage beyond the 50% mark.

If lawyers did not come in units of one but were identified by full-time equivalents, the mathematical median might be around 3.2. “Mathematical median” is not a term of art, but tries to convey the “typical” number of lawyers in Canadian law departments if the numbers of lawyers could be stated more precisely than after jumps of one full lawyer at a time. The average won’t work because some very large departments might push the number higher than what I am trying to get at. Perhaps there is an average below the median?