Law Department Management Blog

My article published in the National Law Journal on April 8, 2013 discusses three innovative forms of graphics.  Mosaic plots, box plots, and heat maps can represent all kinds of data that law department managers care about.  It offers some examples of each kind of graphic after explaining what they look like.  If you would like to learn more about these techniques, please click here for the article.  13-04-08 grahics of mosaic box and heat NLJ Rees Morrison.

In general, the law department industry has only just begun to figure out what data it can efficiently generate;, how to represent that data graphically, in tables or in other forms; and what analyses are made possible by that combination.

If you appreciate graphical presentations of data, take the GC Metrics 2013 benchmark survey.  Here is the UR: https://novisurvey.net/n/GCMetrics2013.aspx T here is no cost to complete the quick, confidential survey and get the five Releases.  Aside from some demographic questions like name, email and industry, the survey asks for six 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.

This leader to an article caught my eye: “In markets with little regulation, litigation soars.  As regulation rises, litigation falls. Unless consumers are bound by so-called tort reform, their only recourse when harmed by an unregulated product is to sue its maker.” The quotation comes from Life Science Leader, December 2012 at 44.

Those who speak and write about law departments chronically bemoan the regulatory load faced by companies.  But when rules are laid down by government agencies, at least safe harbors and legislatively-sanctioned behaviors shelter companies from lawsuits in those areas.  In an unregulated market, the free-for-all companies might have fewer forms to complete but many more briefs to file.

Of course, everyone can think of exceptions and regulations can fan the fires of litigation, but the overall point bears on benchmark metrics and differences between industries.

Even deeper, for those who care about how to accurately quantify law department metrics, is the question of how to “measure” regulatory load.

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To learn how you stack up against others in your industry, take the GC Metrics 2013 benchmark survey.  Here is the URL:  https://novisurvey.net/n/GCMetrics2013.aspx  It’s free, quick, and you will get five Releases.  The survey asks for six of your 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.

One of the predictions in the Economist, the World in 2013 at 25, is that conglomerates will become more common.  As banks and venture capitalists become more risk averse, the article argues, companies will invest their own cash in a wider array of enterprises or endeavors. Another reason is that companies in emerging markets have sprawled into all kinds of activities and are now competing globally. Third, conglomerates will return to favor because consumers like integrated offerings from companies they recognize and trust.

If indeed significantly more companies consist of somewhat unrelated business activities (my rough definition of a corporate conglomerate), it makes it more difficult for their law departments to benchmark themselves.  There simply are not many General Electric’s and 3M’s around so that they can find similarly-structured, multi-line peers.

Consultants who advise law departments of conglomerates may have to combine findings from several industries and create a proxy benchmark or they may have to conduct what I call “sector” benchmark studies.  Sector benchmarking is harder to do because participants have to untangled costs and headcount shared by each sector and define their sectors somewhat comparably.

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Take the GC Metrics 2013 benchmark survey, whether you are a conglomerate or not!  Here is the URL:  https://novisurvey.net/n/GCMetrics2013.aspx  It’s free, quick, and you will get five Releases.  The survey asks for six of your 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.  At this early point, about 65 companies have taken part.

A recent article made two points regarding the graphical presentation of information. The points derive from a study that presented four kinds of graphics and asked a group of doctors to rate a pair their characteristics: were the graphs correct and were they enjoyable to look at.  The doctors said that an “icon graph” was the most accurate depiction of the data, compared to a table, a bar graph, or a pie chart, though it was also the least enjoyable.

Since icon graphs are new to me, let me describe the one the article showed.  The icon graph had for rows and four columns of squares.  Some of the squares were solid green, some solid red, and some had a diagonal line through them from the top left to the bottom right. Thus, each cell conveyed one of four combinations: either color and lined or not.  That’s a lot of information to convey in one graphic!

For example, if you had four categories of law firms you retained last year, by number of lawyers, and you had several ranges of fees paid, an icon graph could locate the appropriately colored/lined square for each firm over its fees paid during the year.

You could add even more complexity (such as three colors or bold outline dotted and solid diagonals) and thereby show many more variables about the law firms, but the risk would be that those who have to make sense out of the icon graph would fail.

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Take the GC Metrics 2013 benchmark survey, all you graphics fans, and enjoy the various graphics in Release 1.0  Here is the URL:  https://novisurvey.net/n/GCMetrics2013.aspx  It’s free, quick, and you will get five Releases.  The survey asks for six of your 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.

During the four years that I have run the General Counsel Metrics benchmark survey, only four companies headquartered in Japan have participated.  On the other side of the Pacific, 19 subsidiaries of Japanese companies, all based in the United States, have taken part.

Now I may know why companies in Japan have rarely submitted benchmark data to the GC Metrics study.  According to the Asian Lawyer, January 2013 at 10, the Japan Federation of Bar Associations counted 707 bengoshi working in corporate law departments.  Bengoshi are the elite, Japanese-qualified lawyers.  That modest number jumped significantly from 64 in 2001: a tenfold increase in ten years. However, they still make up only two percent of the 32,000 bengoshi currently qualified to practice.

Even so, there is a Japan In-house lawyers Association, whose president is Yasushi Murofushi, the general counsel of Credit Suisse Securities (Japan).  There is also the 1,000 member Association of Corporate Legal Departments, headed by Tadaaki Sugiyama, general counsel of Kao Corporation.  Quite obviously, many non-bengoshi fill the ranks of Japanese legal departments.

According to the article, one driver increasing the number of in-house Japanese lawyers is that there are simply many more bengoshi available to be hired.  And, they are less expensive, because the median in-house starting salary is about half of what newly qualified bengoshi earn at a big-name Japanese law firm.

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Take the GC Metrics 2013 benchmark survey, all you readers from the law departments of Japanese companies!  Here is the UR: https://novisurvey.net/n/GCMetrics2013.aspx There is no cost to complete the quick, confidential survey and get the five Releases.  Aside from some demographic questions like name, email and industry, the survey asks for six 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.

With permission, I reproduce below a post from Lynn Galbenski of Lumen Legal:

On February 12 from 1:00-2:00 p.m. EST, Lumen Legal will be hosting our first webinar of the year. It’s part of our 2013 Corporate Counsel webinar series to help Corporate Counsel meet the challenges of a changing legal marketplace. We’ll host six free webinars held this year.

Our Founder and SVP of Strategic Initiatives, Dave Galbenski, will be interviewing Rees Morrison. Rees is the President of General Counsel Metrics, LLC. For more than 25 years, Rees has specialized in corporate counsel consulting. He’s helped hundreds of general counsel and chief legal officers manage their legal departments more effectively. In 2009, he launched the first corporate counsel survey with over 800 corporate legal departments. He did so because he saw the clear need for a larger, simpler, less expensive survey. Today, over 1,000 corporate legal departments across 37 countries participate. In addition, 26 industries are covered. During the webinar, Rees talks about his latest release and shares the six fundamental benchmarks all corporate legal departments should monitor:

1. Total legal spending as a percentage of revenue

2. Lawyers per billion dollars of revenue

3. Internal to external spending ratio

4. Internal spending as a percentage of revenue

5. External spending as a percentage of revenue

6. Cost per lawyer hour

Rees also analyzes the six metrics by 26 industries, 15 countries, ten regions and four revenue quartiles. The insights Rees brings to corporate legal department through this survey are significant. I found his “Legal Intensity” industry ranking to be quite interesting. You can quickly see how different it would be to be a lawyer in the retail space (low legal intensity) vs. the technology space (high legal intensity). Rees provides many reasons why that’s the case.

In addition, compensation is covered. How much does a corporate legal department lawyer receive in total compensation in the first decade of practice? The second? How does this vary by practice area? Which practice areas are most lucrative? How does compensation vary by industry? Which industries pay the most?

If you’re interested in attending the free webinar, click here for more information or to register. [https://www4.gotomeeting.com/register/476368895] All you need is a computer and a phone line. The information you gather will be invaluable.