Three key information failures and law department disasters

A fascinating article highlighted three common ways groups of fail to interpret information.  Translated into the law department’s world, these information failures help us understand why law departments might ignore or devalue indications – signals – of serious problems [46 MIT Sloan Mgt. Rev., Spring 2005, pg 5].

Signals are not seen as warnings because they are consistent with a law department’s beliefs and aspirations.  For example, if a department prides itself on hard-ball litigation tactics, its belief in them and its desire to scorch the plaintiff’s earth could blind it to signals about higher costs, longer cycle times for law suits, a more aggressive plaintiff’s bar, and negative publicity.

Warning signals are noticed but the general counsel and senior lawyers do not act on them.  A law department might lose several A players, lag on employee morale surveys, rumble with wide-spread discontent during annual reviews, and hear from the HR person supporting the department about continuing tensions.  If senior management of the department does nothing based on these information signals of, a serious condition will worsen.

Managers of the department each have partial information and solipsistic interpretations, so no one has a holistic view of the problem.  For instance, several business unit GCs know that their groups are spending too much on temporary paralegals and admins, but these lawyers don’t share a collective view of this data, which would confirm the department-wide problem of understaffing.