« February 2005 |
Main
| April 2005 »
Most law departments have underway at any time a number of improvement efforts. Adding content to part of the intranet, revising the evaluation process, negotiating discounts with a foreign agent – good department management never stands still.
Just as the definition of “matters” for a matter management system eludes precise definition, so too does the term “initiative.” [For an article that takes a first step toward a taxonomy of initiatives, see mine entitled “Worth the Investment,” 28 Legal Times (Jan. 24, 2005) or visit our website at Hildebrandt.com]
Much may be happening, but the department and its clients might not appreciate all the management initiatives. To keep track of your efforts to improve management in your department, track the change initiatives. Not only will you improve your project management and set better priorities, you will also be able to show your enlightened management goals.
In the glare of downsizing, law departments debate letting go their own staff who analyze budgets, handle the procedures of compensation and promotions, or support the hardware and software in the department. Relying instead on the Finance, Human Resources, and Information Technology departments sounds attractive when heads are being counted. The trouble is, when you do not control a person dedicated to your group you lose expertise and commitment. Worse, supporting a staff group often does not appeal to the career ambitions of the best staff people in those departments. They want to be where there are profit centers, not costs centers. That means turnover in the support you get from a staff group.
One innovative way to address some of this might be to turn to one or more of your key outside counsel. They can assist especially well with your IT needs, and they will care about pleasing you. They understand lawyers and they understand legal technology. Many firms, like Foley & Lardner and Reed Smith, pride themselves on their practice technology strength.
Sophisticated general counsel do what must be done to have capable successors. Ideally, when the GC retires or leaves, the law department has one or more lawyers who can put on the crown. Internal succession is the best, I believe.
If there are no capable or acceptable internal candidates, the company must bring in someone from outside – a riskier decision. However, if the company realizes that there must be significant change in the law department, an outsider is more likely to be able to make major changes.
My conclusion: Groom internal successors, at all levels, but especially for the general counsel position; favor outside successors if the law department needs substantial improvement or redirection.
It is a challenge having compliance staff, or any non-lawyer function such as contracts management or internal audit, reporting to the general counsel, because those staff may be viewed by the lawyers as second-class citizens. If deep down the lawyers in charge believe that lawyers stand at the top of the professional ladder, they will create or allow to grow an atmosphere of unequals. I have seen this most commonly when compliance and law are housed in one department.
If you have lawyers inter-mixed with non-lawyer professionals, make special efforts to treat the groups equally. The efforts could include direct reporting, title equality, special recognitions, and countering overt or covert distinctions. rwmorrison@hildebrandt.com
I know two New York City law departments that each year bring in a couple of third-year law school students as interns. The departments pay them a very modest stipend and try to find them tasks that are interesting and useful.
This is a commendable process. Law school students will welcome something more meaningful to do and they can be low-cost manpower for a department. The interns can take on administrative tasks that need completion. Over time, too, if more law departments introduced law students to the in-house alternative, the flow of talent into law departments would continue to improve. Even if those students never join a law department, as practicing lawyers they will have a smidgen better understanding of the in-house life.
When a law department decides to gather its lawyers (and perhaps other legal professionals) for an off-site retreat, its planners might invoke Morrison ’s Rule of Three. One third of the retreat should involve clients speaking about what they do and what they need from the law department. All law departments need to know more about the businesses they support.
Another third should be updates on the law that pertains to the company. Law firm speakers or speakers from the department can educate the participants on new developments and how to respond.
A third portion of the retreat should concern law department management. All the in-house counsel share a support infrastructure, a technology platform, records management needs, relations with paralegals, management of outside counsel, and other administrative demands.
Using this Rule of Three, a retreat is enriched because the participants learn about their company, the laws they need to know, and how they can work together efficiently.
Progressive law departments continuously seek feedback from their clients about how well the department is servicing them. Even better, many law departments collect survey data so that they have metrics to back their conclusions. My book, Client Satisfaction for Law Departments, covers this subject.
A more subtle question, however, concerns whether a law department should weight the responses from certain clients more heavily than those from other clients. Departments should try a weighting analysis.
For example, give the highest level of client respondents a 1.3 multiplier. Whatever the most senior executives’ scores are, add into your calculations 30 percent more of those scores. This adjustment will represent their high-level evaluations with more clout. Thus, if three senior executives each give the department a score of 4.5 on responsiveness, for example, add a 0.9 respondent with 4.5. The next level down of executives could have a weighting of 1.2, and so forth.
To gain another perspective, give more weight to client responses in proportion to their more significant involvement with the law department during the period covered. A single question can elicit this degree of involvement. For those who use the department the most, give their scores an additional weight, such as 30 percent.
(Someone might protest that those who do not use the law department are the ones that ought to get the most attention, because they may be putting the company at risk. The problem with this is that it is difficult to detect unasked-for legal needs, until it is too late.)
A law department enamored with statistics could adjust both elements – seniority and amount of experience. Of the two, I grant more influence to seniority, for the simple reason that perceptions by senior executives of the department largely shape the company’s perceptions.
BTI Consulting published some figures and conclusions in Law Practice (Oct. 2004, pg. 13) that stuck in my craw. “In 2004, overall client spending on legal affairs dipped almost 7 percent [from 2003]. Despite these cuts, spending on outside counsel continues to rise, climbing 4.4 percent in 2004. Shrinking legal departments are a key driver both in the decline in overall spending and the push of more dollars to outside counsel. ‘Corporate legal departments have declined by 40 percent since 2001’ explains [a BTI analyst].” (emphasis added)
Setting aside my methodological questions about the solidity and representativeness of the survey respondents, I am deeply perplexed to read that overall legal spending declined (by 7%) and that law departments had shrunk almost in half.
Nothing I have encountered lends support to either finding. To the contrary, from my consulting experience, legal spending has steadily risen and law departments have remained stable or grown a bit.
Lawyers at McGuire Woods described a useful approach in Counsel to Counsel (March 2005 at pg. 22) A law department should gather key personnel from critical areas such as compliance, research, legal, sales and marketing. Divide those participants into cross-functional teams and give each team a case study regarding a fictional company. Have the teams work through a series of different legal problems that progressively worsen for the company.
Each team then returns to the full group and reports on their scenario and how they approached and resolved it. The teams analyze the situation, make recommendations, communicate which issues are important and outline their solutions.
The case study process achieves the dual goals of cross-pollinating the company's departments, which makes risk management real, and creates an environment for systematically learning and understanding what the company needs to do and determining risk management procedures.
The March 2005 issue of Counsel to Counsel referred to an interesting idea (pg. 9): for a large merger, the general counsel selected a senior lawyer, suspended or re-assigned that lawyer’s typical responsibilities, and for the duration of the deal, made the merger the lawyer’s sole job. (Also noteworthy, the general counsel persuaded the president of the unit driving the merger to similarly assign a top lieutenant from that business unit.)
Opportunities like these can be rewards (well, I don’t want to be naïve, as they might be nightmares) for the temporarily-assigned lawyer, and they will certainly test and grow the lawyer’s management skills. They recognize the person as worthy of special treatment. It is part of succession planning and talent development. Might even get the deal done more efficiently!
