Process maps used to guide much management thinking. Clumps of consultants and teams of clients would spend unlimited hours and dollars describing processes with arrows, triangles, squares, and elaborate inscriptions. Law departments have process mapped how litigation is handled, how patents are obtained, the way bills are reviewed, and how files are created.

Usually the process map describes the “as is” situation. Recommendations then focus on the “future state” of the reengineered process. By depicting the many steps and the decision points of a process, one could supposedly identify areas for streamlining.

It is very important to understand processes, I hasten to add, so you can make recommendations for improving them. But I doubt the cost effectiveness of preparing elaborate descriptions of the old process - especially using the specialized techniques and software tools that process mapping requires.

Process maps used to guide much management thinking. Clumps of consultants and teams of clients would spend unlimited hours and dollars describing processes with arrows, triangles, squares, and elaborate inscriptions. Law departments have process mapped how litigation is handled, how patents are obtained, the way bills are reviewed, and how files are created.

Usually the process map describes the “as is” situation. Recommendations then focus on the “future state” of the reengineered process. By depicting the many steps and the decision points of a process, one could supposedly identify areas for streamlining.

It is very important to understand processes, I hasten to add, so you can make recommendations for improving them. But I doubt the cost effectiveness of preparing elaborate descriptions of the old process - especially using the specialized techniques and software tools that process mapping requires.

The conclusion of my review of a university’s law department coincided with the annual conference of the Association of College and University Attorneys. My client invited the general counsels of five leading universities to gather for a few hours at the end of their conference. I presented eight or ten issues that had arisen in my review -- setting aside issues that were specific to individuals.

My client carried on by describing his organizational and reporting structure. Each general counsel gave his or her matching description. That portion of the session alone was quite valuable. More valuable even than that were the discussions thereafter on specific topics, such as having a deputy or providing technology support or using a receptionist.

Most general counsel belong to groups (See my post of Feb. 20 about groups for general counsel and March 24, 2005 about a UK group.) and can find occasions to bring together some of their peers to discuss management issues

With a nod to Sir Isaac, for every management action taken in a law department, there is an equal and opposite reaction. It would be an excellent discipline for every manager to ponder the trade-offs inherent in every recommendation.

If we decide to “add paralegals,” shouldn’t we expect the opposite reaction that the company will oppose headcount additions, someone will have to manage the paralegals, paralegals have little upward mobility, change is unsettling, and lawyers will have to know how to delegate to them effectively - not to mention that there must be sufficient work to keep them busy? We don’t intend the consequences, and some of them are negative.

I firmly believe that we can best understand law departments, or try to understand those frustratingly complex creations, if we apply the insights of systems theory. Part of doing so is to have a model or a framework. A useful one has been developed by McKinsey, which is commonly known as the “7S Framework.”

The seven components (here’s a clue: they each start with an “s”) are structure, style, skills, shared values, systems, staffing, and strategy. It’s possible to analyze a law department reasonably well using those components. Much more can be said about this McKinsey framework, but its core proposition holds that a law department operates best when all seven components are in alignment.

Law departments often use the Strengths-Weaknesses-Opportunities-Threats tool and its four quadrants in an effort to analyze their strategic position. Its strength is simplicity and superficial explanatory power. Its weaknesses, however, cause me not to discard the tool.

One problem is that a characteristic can be both a strength and a weakness. For example, technology or leverage could be judged either one. Second, few SWOT analyses put priorities on strengths or weaknesses. They are an undifferentiated mass. Third, a strength or weakness should be relative to the characteristic at some other law firm or law department. If it is compared to some platonic ideal (“We don’t communicate well”), the list could go on forever and lack reference to reality.

Fourth, internal strengths and weaknesses and external opportunities and threats overlap. For example, it might be a weakness to have only one international office, but that observation has an implicit notion about the external threat of global competitors. I also believe that a law department could state most strengths as the inverse of a weakness, and vice versa: “We don’t have e-billing” (weakness) is probably the converse of “We have a successful manual bill review process” (strength).

Finally, but not exhausting SWOT’s shortcomings, the four quadrants are all interlocked and to talk about one separately from the others may appeal analytically but leaves out the complexity and inter-connectedness of a law department. (See the following post on law departments as systems.)

Every consulting project I hear, “We want to be the trusted advisor of our clients, a consigliore.” Those who bandy the term about don’t know its illegal roots. The most common association of the Italian term is with gangsters, Mafiosa, Cosa Nostra racketeers. Discomfiting, isn’t it, that the Knoxville Bar Association’s In-House Newsletter bears the name “Consigliore”? Odder still that the chief legal officer of a company would want to be described with the same term as the right-hand confidante of the Godfather.

Recently, McKinsey & Company sought the views of more than 9,300 business executives around the world. The executives ranked 11 constraints on growth, 5 of which clearly involve legal issues. I have listed them in order, showing the ranking in parenthesis:

(1) “Competitive environment” includes pricing, antitrust, and M&A guidance;
(3) “cost/availability of talent” includes employment contracts, discrimination, and compensation arrangements;
(4) “substitutions/innovations by competitors” relies in part on intellectual property protection;
(5) “excessive regulations” shouts out legal advice;
(7) “inadequate government/legal protection” self-evidently will need the counsel of lawyers.

Judging from the forecasts of this impressive set of global executives – 34 percent North American and 39 percent European – demand for the expertise and judgment of law departments to ameliorate growth challenges can only grow. McKinsey Quarterly, 2005 No. 2 at pg. 24

If, and it’s a big if, one or more of your law firms agree to knock off 2-3 percent for your paying them in, say, less than 10 days (See my posts of May 4 and Aug. 24, 2005 dubious about such discounts.) you have to change some internal operations.

For example, Waste Management’s law department creates an incentive for lawyers to review bills expeditiously because their budgets benefit, it regularly reports on cycle time for approvals, and it develops statistics tied to accounts payable. (Metropolitan Corp. Counsel, March 2005 at pg. 55).

One session at the ACC 2004 Annual Meeting (805) offered some pointers for what law departments should normally expect from law firms regarding extranets. The first expectation caught my eye. ”Launch of a new extranet in minutes upon your request for as little as $500/month, often paid by the firm.” This makes extranets a commodity.

The other three attributes law departments deserve with their extranets are “extremely useable and intuitive interfaces,” “robust, feature-level security,” and “integration with existing systems (such as billing).” If these four expectations are truly matters-of-right, why are there not more extranets? I don’t hear about them in my consulting projects, only from vendors of extranets and a few law firms (See my post of February 20, 2005 on technology as it affects ordinary in-house lawyers.)