Law Department Management

Innovative report combines data on matter management systems (MMS) with benchmark metrics

A ground-breaking report, which combines data on matter management systems (MMS) along with popular benchmark ratios, is the creation of General Counsel Metrics, LLC. MMS Insights reports on 130 Canadian and U.S. legal departments that use one of more than 15 matter management systems. Its dozen charts and explanatory text show how the MMS packages with at least three departments compare to each other on such benchmarks as average number of lawyers in the department and total legal spend as a percentage of revenue. Also, the 110-page report collects more than 150 posts from this blog regarding MMS, all organized under five commonly asked questions, edited, indexed, and cross-referenced.

A series of posts here will share some of the findings from the study. If your IT group or your law department would like to obtain MMS Insights, please write its analyst and author, Rees Morrison, at Rees@reesmorrison.com.

Posted by Rees Morrison at 9:03 AM in Technology | Permalink | Comments (0)

An example of a secondment to be a company’s corporate secretary

The supplement to the ACC Docket, May 2012 at 8, charts the career of Brigitte Catellier, Vice President, Legal Affairs and Secretary of Astral Media Inc. Early in her career, while at a large Canadian firm, she was asked by one of her clients, Culinar, to take on the tasks of its corporate secretary. Unusually, she remained with the law firm, but spent about a third of her time working in-house at the company. The article does not add how long the unusual secondment lasted.

This put blog has several references to law firm lawyers who simultaneously hold a position in a law Department, but this is the first instance I have run across where the lawyer is also serving as a company secretary. Since my last metapost on secondment, I have gotten a second wind, so to speak (See my post of Aug. 25, 2009 #2: four-month secondment to Legal Aid Society; Sept. 13, 2009: ten good questions for a secondment; Oct. 13, 2009: if law departments demand large numbers of secondees; Jan. 20, 2010: reverse secondments as a training method for legal departments; March 24, 2010: secondments will rise if more firms decide they are a prerequisite to partnership; Feb. 22, 2010: loyalty scheme of British firm can result in secondees; June 14, 2010: doubt that departments retain firms because of secondment prospects; April 21, 2011: current Motorola Solutions GC was once a secondee to it ; and May 3, 2012: as-need lawyers as alternative to secondments.).

Posted by Rees Morrison on May 31, 2012 in Outside Counsel | Comments (0) | Permalink

When profit margins of big firms are five times those of big companies, why not try to reduce fees a smidgeon?

An excellent article in the ACC Docket, May 2012 at 32, describes the Litigation Investment Model of Reckitt Benckiser. Essentially, the model puts law firms at risk for their profit margin when they represent that company. And, those profits are lucrative.

For the 200 largest law firms in the United States, ALM Media found that their profit margin last year was about 38 percent. (I assume that one-third margin makes up the distributions to partners at year end, over and above their draws.) Law firms make much more than their clients as a percentage of revenue. "In the last reported quarter, the average operating profit, net of tax, for a typical US manufacturing company was 7.2 percent, and among technical and professional services, it was a paltry 6.8 percent." Thus the heavy-weight firms in the United States are gold-plated; their profit returns are on the order of five times greater than the clients they represent. Hmmmmm……

Posted by Rees Morrison on May 31, 2012 in Outside Counsel | Comments (0) | Permalink

Compensation of in-house attorneys in Brazil, Dubai, and the United States – a need to adjust for income tax levels

As my General Counsel Metrics benchmark survey now collects compensation data, I pay more attention to findings from that realm. For example, "In Brazil, lawyers can expect to receive an average basic salary of $279,600 – 21 percent higher than the average of $231,500 in the United States." That comes from the ACC Docket, May 2012 at 18, which draws on a compensation study done by a recruiter. I have previously reported on data for U.S. general counsel, who from my data had median base salary plus bonus of $279,457 (See my post of May 23, 2012: from General Counsel Metrics benchmark survey.). The reported Brazilian and U.S. figures seem quite high, especially if “average basic salary” does not include bonus amounts.

I digress. Here is the point of this post. "In Dubai, the average salary has reached $181,800." That is strikingly lower than the other two national figures but as is disclosed thereafter, Dubai residents don't pay income tax. If you were to add roughly one-third to the basic salary figure for taxes, the comparison with Brazil and the United States becomes much closer. A benchmark study, let alone a compensation study, that uses Dubain figures unadjusted would seriously misrepresent comparisons.

Posted by Rees Morrison on May 31, 2012 in Talent | Comments (0) | Permalink

Rees Morrison’s Morsels #167: the long and the short of it (in brevia veritas)

In-house counsel app. Thomson Reuters has released what it believes is the first iPad app delivering corporate counsel specific information. Called GC Advisor, the app offers information, technology and legal research tips, as well as articles and CLE classes. There is also an RSS feed to CLE-accredited webcasts from the West LegalEdcenter and to Twitter feeds. The app is available from iTunes, according to Charles Christian’s American Legal Technology Insider, May 2012 at 5 (See my post of Feb. 1, 2011: app industry for matter management functions; and April 15, 2011: information delivered in-house by mobile apps.).

How many in-house lawyers practice full-time in New York State. Under a rule promulgated in 2011, Part 522, “All in-house counsel employed full-time in New York as of Part 522’s effective date, April 20, 2011, were required to apply for registration within 90 days of the effective date.” This update comes from NYSBA Inside, Spring/Summer 2012 at 16, which is devoted mostly to the attorney-client privilege. Here is a way, perhaps, to find out how many in-house lawyers are in one of our largest states, and perhaps even how many law departments! To learn more about the New York requirement, write one of the co-authors, Vincent Syracuse (See my post of May 23, 2012: in-house attorneys in the United States.).

Extravagant number of lawsuits in Brazil would skew metrics. It seems innocuous to ask on a survey for “your number of pending lawsuits.” Then I read in Alternatives, the newsletter of the International Institute for Conflict Prevention & Resolution, May, 2012 at 120, about Brazil, “with 70 million court cases now pending.” A Brazilian litigator observed that “It’s very cheap to litigate in Brazil” and that cases routinely drag on for 10-15 years. It would totally distort a world-wide count of cases, such as for a benchmark study, if a company doing business in Brazil has more there than everywhere else combined.

Scale analysis. John Brockman, Ed., This Will Make You Smarter (Harper Collins 2012) at 185, offers a discussion by Giulio Boccaletti on scale analysis. The author claims that scale analysis is “one of the most robust bridges between the linear and the nonlinear, the simple and the complex” (See my post of Aug. 25, 2009 #4: law departments as complex non-linear adaptive systems; and Nov. 26, 2011: chaos theory and legal departments.).

Gender difference in raises expected for joining another company’s law department. From the ACC Docket, May 2012 at 18, which draws on a study done by a recruiter, comes a troubling finding. “Men, who said they would require, on average, a 19.2 percent rise to move, expected more than women, who expected only 13 percent." The recruiter suggests that women take more into account that just salary, but it could be that women need to have more confidence in their abilities and the compensation they deserve.

Posted by Rees Morrison on May 31, 2012 in Thoughts/Observations | Comments (0) | Permalink

Part LXIX in my series of collected metaposts embedded in other posts

Attorney-client privilege II (See my post of Feb. 28, 2012: attorney-client privilege with 13 references.).
Boards and GCs (See my post of May 13, 2012: general counsel and boards of directors with 9 references and 1 meta.).
Budgets, quarterly (See my post of May 30, 2012: seek quarterly budgets from firms with 8 references.).
Co-location of lawyers with revenue (See my post of May 25, 2012: quantify lawyers by location near revenue with 9 references.)
Concept visualization (See my post of March 7, 2012: concepts visualized with 8 references.).
Logical reasoning (See my post of April 26, 2012: fallacies with 6 references.).
Government agency law departments (See my post of May 13, 2012: law departments of government agencies with 19 references.).
Math concepts (See my post of April 17, 2012: seven sophisticated math concepts with 8 metas.).
Number of in-house US lawyers (See my post of May 23, 2012: in-house law departments in the U.S. with 10 references.).
Tools (See my post of April 17, 2007: “tools” defined and in this blog, by category, with 73 references.).

Posted by Rees Morrison on May 31, 2012 in Thoughts/Observations | Comments (0) | Permalink

An initiative underway to resolve e-commerce disputes online without someone from the company being involved

Alternatives, published by of the International Institute for Conflict Prevention & Resolution, May, 2012 at 120, mentions ongoing work on a site that will enable certain kinds of disputes to be resolved on the internet. Specifically it explains that the Uncitral Working Group III Online Dispute Resolution initiative has enlisted Modria, a software company, into the working group to create an online dispute resolution platform.

The goal of the working group is to “develop tools to be applied to high-volume, low-value cases characteristic of E-commerce." Law departments should welcome any aids that enable them to efficiently resolve cost-of-business disputes with consumers. This particular one may have an algorithmic basis for settling the disputes along the lines of a model that eBay uses. The CEO of Modria stated that eBay settles 90% of its disputes without human involvement (See my post of Dec. 31, 2006: online arbitration systems; and Oct. 20, 2009: online dispute resolution and two sites mentioned.).

Posted by Rees Morrison on May 30, 2012 in Productivity | Comments (0) | Permalink

Four surveys with data-based findings regarding alternative dispute resolution

Those who follow the field of alternative dispute resolution can find a trove of recent empirical research described in Alternatives, the newsletter of the International Institute for Conflict Prevention & Resolution, May, 2012 at 118. The issue summarizes four research programs and their findings regarding corporate legal practice and ADR.

Referred to are “a Cornell University/CPR Institute/Pepperdine University School of Law survey of the Fortune 1000; the 2011 RAND Report on Business-To-Business Arbitration in the United States [with 121 respondents]; The Deloitte Global Corporate Counsel Report 2011; and the 2010 International Arbitration Survey conducted at Queen Mary [the School of International Arbitration], University of London, in conjunction with White & Case [136 respondents to a survey and 67 interviews].”

Since my last metapost on arbitration, I have written several more posts (See my post of Feb. 4, 2008: regression analysis of customer arbitrations; Dec. 6, 2008: techniques favored by mediators; July 29, 2009: costs of commercial arbitration; Nov. 8, 2009: costs of arbitrators as compared to costs of the arbitration; Dec. 14, 2009: a clever rating system of arbitrators and mediators; June 2, 2010: data on forums for international arbitrations; Sept. 12, 2010: a resource to find neutral arbitrators and mediators; Feb. 11, 2011: group of in-house lawyers unite to reform international arbitration; Dec. 28, 2011 #4: infrequency of arbitrations among U.S. companies; and Dec. 30, 2011: 5 to 1 major lawsuits to major arbitrations.).

Posted by Rees Morrison on May 30, 2012 in Non-Law Firm Costs | Comments (0) | Permalink

Tension between quarterly or semi-annual budgets and the requirement of Finance for an annual budget

Realistic in-house counsel accept that the accuracy of a law firm’s budget declines precipitously the farther out it goes (See my post of Aug. 4, 2009: use a funnel metaphor for budgets; Oct. 22, 2008: build for flexibility rather than strive for prediction; July 9, 2009: obtain budget scenarios instead of single figures; and Nov. 3, 2009: twists and turns when you test the accuracy of law firm budgets.).

A budget re-submission for major matters each quarter makes sense (See my post of April 27, 2005: Cummins and budget no farther than your headlights; March 4, 2008: budget out about a quarter at Time Warner Cable; Jan. 21, 2009: JDS Uniphase and its quarterly updates; March 29, 2009: review budgets every three months; May 6, 2009: meaning of “budget” vs. “forecast”; Aug. 11, 2009: McKinsey recommends quarterly budgets; May 11, 2011: thoughts on budget time frames; and June 2, 2011: e-Bay’s practice.).

The CFO, unfortunately, may still insist on a place-holder figure for the annual budget. This tension between pragmatic usefulness and these-are-the-rules guesstimates will never be resolved.

Posted by Rees Morrison on May 30, 2012 in Outside Counsel | Comments (0) | Permalink

Activity budgets compared to cost budgets, and the final touch to both

On a panel recently, a speaker urged the attendees, all from law departments, to request from their outside counsel what he called an “activity budget.” Rather than a money projection of what the firm’s services were expected to cost for the budget period, the information he requests is what the firm proposes to do during the period – its activities. Projected tasks and outcomes make clearer the strategy of the firm, the pace it proposes to follow, and many of the assumptions driving its case plan.

Even better: combine a spend budget with an activity budget and top it off with a careful review and critique of both by the responsible in-house lawyer.

Posted by Rees Morrison on May 30, 2012 in Outside Counsel | Comments (1) | Permalink

Pay data obtained mostly from large law departments makes lawyers in smaller departments feel bad

Organizations that collect compensation and benchmark data gravitate toward large law departments. They want to boast about the impressive number of lawyers among their respondents, the gargantuan revenue they support, and the league-table rankings of their participants.

The downside of the Fortune fetish is that the resulting metrics do not match well for the four more numerous smaller legal departments, who operate under different constraints. Compensation figures, especially, skew much higher for large departments. A recent post underscored this “income inequality.” The median cash compensation of a set of general counsel of smaller companies was less than the median cash compensation of specialist lawyers at predominantly large departments (See my post of May 23, 2012: preliminary data on compensation from General Counsel Metrics.).

Posted by Rees Morrison on May 30, 2012 in Talent | Comments (0) | Permalink