During the summer of 2005, 412 inside corporate counsel responded to an online survey sponsored by ACC and Corpedia, a provider of ethics and compliance training. Some 85 percent of those respondents were at US-based companies, and 60 percent were with publicly-traded companies.

The surveyors reported that “for organizations between 1,000 and 9,999 employees, 26 percent are spending more than $1 million annually on their compliance and ethics programs. The summary does not indicate whether that means spending both internally and externally, but assume it is a total figure.

If we take the mid-point of 5,000 employees, that size of company would have about 12 lawyers (using data from 123 companies in the Hildebrandt 2005 U.S. Law Department Survey, and 2.55 US lawyers per 1,000 U.S. employees at the median), and thus a total legal spending in the rough vicinity of $12 million (assuming about $400,000 inside and $600,000 outside spending per lawyer). The ratio of ethics and compliance spending to legal spending would then be less than 1 to 10.

The McKinsey Quarterly, 2005, No. 4 at 36 urges decision-makers to build and use “reference classes.” For important law department decisions, likes whether to staff lawyers overseas, create compensation broadbands, decentralize reporting of lawyers, or bid work out on a fixed fee, identify a group of similar decisions at other companies. Isolate the elements of success in those, and compare your situation to theirs.

The use of reference classes is like benchmarking against the gestalt of others’ comparable circumstances.

A piece in the McKinsey Quarterly, 2005, No. 4 at 9 explains that some IT managers, striving to have executives understand and accept the costs of technology, roll out “cost transparency programs.” I don’t know what that phrase means, but that hardly deters me from translating it to law departments, who also need executives to grasp the expensiveness of and need for outside counsel.

Rather than beat one’s head against the wall of budget cut backs, shine light into the black box of outside counsel costs – expose the numbers, educate the pockets. Publish the amounts spent by firm, by practice area, by business or staff unit – and show trend data on all of them if possible. Calculate blended billing rates for your key firms, and show the discounts you have gotten from standard rates.

As Sy Syms says, “an educated consumer is our best consumer.”

A lawyer I know, responsible for mergers and acquisitions at a growing financial services company, offered some comments that deserve passing on.

This lawyer has concluded that international M&A deals, compared to domestic US deals, take three times as much time and five times as much money. The linguistic, cultural, and legal complexities of acquisitions outside the US pump up both hours and dollars.

His second rule of thumb holds that a billion-dollar deal requires a good in-house lawyer full time. Strikes me as a plausible benchmark for staffing. Not that the benchmark is linear: a two-billion-dollar deal does not need two FTE lawyers. Look at the size of deals, consummated and not, that your company undertook over the past few years, and test these experienced estimates.

During the summer of 2005, 412 inside corporate counsel responded to an online survey sponsored by ACC and Corpedia, a provider of ethics and compliance training. Some 85 percent of those respondents were at US-based companies; and 60 percent were with publicly-traded companies.

One finding was that “32 percent of all organizations have a dedicated Chief Ethics Officer as well as Chief Compliance Officer and approximately one-third of the time these duties and titles are handled by separate individuals.” I think this means that one-third have two Chiefs and one-third combine the posts.

The report summary does not say whether either of those Chiefs are sometimes the general counsel. (See my posts in 2005 on ethics: Aug. 27 and reputational risk, Sept. 10 and Chief Governance Officers, Oct. 29 and the OECG survey, Nov. 16 and Raytheon’s general counsel, and Dec. 19 on BP’s law department and ethics training.)

Hearing that one law department urges its primary law firm to give ample bonuses to associates who have provided stellar service, and learning of a general counsel who actively lobbied for a favored associate to make partner, I mused that partnering might lead law departments to hitherto unheard of interventions.

A department that closely tied to a firm should care about associate training and retention. I recall Lucent Technologies law department and Orrick Harrington at one time jointly interviewed for new lawyers. Secondments might become something insisted on, and evaluations of partners and associates who work on the dominant client’s matters could face evaluations by that client that outweigh partner evaluations.

The two parties should together make the decision about which lawyer serves as the relationship partner (See my posts of Oct. 8, 2005 on successor relationship partners, Sept. 22, 2005 about Wal-Mart and diversity of relationship partners, April 27, 2005 on Cummins and quarterly meetings with them, and Dec. 3, 2005 on having a relationship partner with each of your key firms.)

A law department that has awarded millions of dollars of work to a firm might well be excused for insisting on better technology at the firm, and better technology support.

Industries vary in the degree to which they face regulation (See my post of Dec. 14, 2005 on McKinsey’s rough cut at regulatory intensity.)

For companies operating in a highly-regulated industry, some sizeable chunk of their general counsel’s time must go to developing relationships with regulators, staying abreast of regulatory requirements, and pushing forward-thinking activities that assuage regulators. (top of mind, Vol. 4, at 10). (See my post of Dec. 19, 2005 on the unusual demands of GCs for foreign-based owners.)

For the general counsel who wishes to plan ahead, the work analysis method can assist. With this method each lawyer projects how the workload may change over the coming 12 to 24 months. Concurrently, the law department solicits from its clients their prospective view of legal needs during the same period.

Marrying the two forecasts produces a picture of legal service demand over the coming years. One can widen this inquiry by speaking with outside counsel about what they see coming; similarly, articles, conferences, consultants, and other sources adumbrate trends. I included this technique in my recent article on strategic planning.

Intranet sites of law departments suffer because administrative staff run them but lawyers possess the knowledge that needs to be on them.

How does this hobble law department intranets? They usually languish in a state of desuetude because lawyers, the custodians of substantive knowledge, can’t be bothered to contribute. (See my post of March 5, 2005 on the unlikeliness of altruistic information sharing.) They know what they know, and see little to gain by pulling it together and taking time to put it where someone else might find it useful. (They also fear being criticized.) At the same time, all lawyers wish others would contribute to the common store of knowledge.

As substantive input to the intranet shrivels, administrative material becomes the common stock, until the site becomes a laughingstock. Where a paralegal or secretary ends up responsible for stocking the intranet, what starts as a full shelf comes in time to be empty.

Over a five year period, more than 100,000 executives took emotional intelligence tests (Harv. Bus. Rev., Dec. 2005 at 24). Their scores for EQ, on a 100 point scale, peaked at the “manager” level – which in the case of lawyers might be about 8-12 years out of law school (average score of 77.5), and then declines from “director” – the next few years (74.5 score), through “executive/VP,” perhaps the equivalent of direct reports to the general counsel (72.5), down to “senior executive,” the general counsel (71).

The researchers, and the authors of a book on the topic, speculate that “companies are still promoting executives principally on the basis of what they know or on how long they’ve served the company, rather than their ability to lead.” Note the implied premise that strong leaders have high EQ scores.

I wonder about the direction of cause and effect. Does being promoted breed EQ deafness or do the EQ deaf stand a better chance of being promoted?

General counsel should be aware, according to these authors, that “for every job we’ve studied, emotional intelligence is a better predictor of performance than technical skill, experience, or intellect.” (See my post of July 31, 2005 doubting this claim of emotional intelligence proselytizers and my post of Nov. 13, 2005.)