What if a law department added up all the months its lawsuits have been underway, and divided by the number of lawsuits? That metric would be a weighted average of duration, and if cycle time matters, the department should strive to reduce the metric over time. With this calculation, if done month after month, the law department should strive to show that its inventory of cycle time is diminishing. The shorter the average cycle time, the closer a law department moves to a claims-management approach.

What if the department divides those total months by the total amount spent since inception on all those lawsuits? That would be the weighted average, monthly burn rate of litigation. With this second calculation – a blended run rate for litigation – law departments will be more accurate when they forecast their spending. They will also have a baseline against which they can show improvement.

Third, but beyond the scope of this post, the length and cost of the case portfolio needs to be assessed in terms of total cost of resolution (See my post of Dec. 10, 2005 on BellSouth and TCR).

The budget-busting lawsuit – the one (or few) that has a seven-figure reserve, glowers from the annual report, drains millions each year from the budget, drags on for years, and causes stress at the Board level – the “bet the company” litigation, demands measures that differ greatly from those that suffice for run-of-the-mill law suits. (See my post of Nov. 15, 2005 about Altria’s definition of major litigation.)

What are some of the differences?

Team approach. Inside lawyer or lawyers dedicated to the lawsuit (or family of suits); outside law firms; advisors and consultants; client representatives, IT personnel, financial advisors – all of these have to contribute.

New practices. Temporary staff, virtual law firms (See my post of Dec. 5, 2005 on Cisco.), elaborate budgets, project management (See my post of April 18, 2005.), extranets (See my posts of Aug. 27 and Oct. 21, 2005), war rooms – all these practices are called into play.

Brand-name law firms. Law departments choose well known, successful and therefore expensive partners from large firms (See my post of June 12, 2005 on cachet firms.). Departments may use multiple firms.

Reports. The major litigation ratchets up the obligations of the law department to report progress, fees, and prospects. More people get the reports and more people care about what they report.

Off-budget line items. Special budget treatment may be needed to account separately for the litigation, apart from the normal operational budget of the department. The law department must keep reserves up-to-date (See my post of March 12, 2005 on Merck’s Vioxx reserves.)

Discovery costs. These costs can balloon so quickly that the department might create one-off processes (See my post of Nov. 24, 2005 on Cisco, Aug. 5, 2005 on Sears, and Feb.1, 2006 on Verizon and Altria.)

Disbursements. These major lawsuits trigger unusual kinds or amounts, such as jury research, graphics, technology support, expert witnesses, photocopy and blowback charges, forensics experts, consultants, and an army of others.

Corporate executives testify. If so, this requires extraordinary preparation and care.

Public relations. High profile cases demand sophisticated communications and sensitivities (See my post of May 20, 2005 about what to do when journalists call.).

Deborah A. DeMott, in her essay, “The Discrete Roles of General Counsel,” 74 Fordham Law Review 955-981 (2005), uses this felicitous phrase, which is so true. She cites another work for this supportive quote: “Inside lawyers “recognize that their job is to give the best possible answer they can, but also that the answer is more valuable at a 50% level of certainty today than a week from today at 90%...”

Urgency, keeping up with the pace of a competitive, race-horse business, offends (or scares) lawyers and all lawyers both remember the mistakes speed caused and plead for more time. But clients need advice, now.

To make the transition from careful, thoughtful perfection as an outside lawyer, who bills by the hour so has a financial incentive to practice that time-consuming way, to the speed of “tell me your best guidance on the elevator down” is to become an in-house lawyer.

The phrase “Whig history” means someone looks at the past and sees an inevitable progression toward the present, as if each step of change were preordained. Not from this seat, I hope, but I can still look pan-optically at law-departments for their management history -- and future (See also Deborah A. DeMott, “The Discrete Roles of General Counsel” 74 Fordham Law Review 955-981 (2005) for a retrospective history of law departments).

Magisterially, I propose these eras:

1980’s: building the in-house law function and achieving recognition (ACCA, Corporate Legal Times)

1990’s: technology, such as matter management systems, and benchmarks, such as surveys and books

Late 1990’s: cost control, which has been mostly outside-counsel cost management

Early 2000’s: compliance, SOX, and risk management

Mid 2000’s: talent, and how best to hire, retain, motivate the best; along with knowledge management

2010’s: cognitive lawyering (See my post of Feb. 15, 2006 and the posts cited there.)

A total of 12 HR lawyers (eight in the US) work directly with Intel’s Human Resources department and report to the Vice President of Human Resources, not to Intel’s general counsel (InsideCounsel, Feb. 2006 at 46).

One could use the same arguments to assign other lawyers: patent lawyers to the R&D department; environmental, health and safety lawyers to the EHS function; marketing lawyers to Marketing; tax lawyers to the CFO; real estate lawyers to operations or facilities, etc. etc.

Debate over the wisdom of decentralized lawyer reporting will continue forever, but the prevailing norm is to have all practicing lawyers – those who interpret laws, represent the company as lawyers, give legal opinions and advice – report to the general counsel.

One often reads about law firms, when they represent a company broadly and over time, in terms that are anthropomorphic. “The law firm knows the client,” “the firm responded quickly,” “the firm and the law department have bonded.” Nonetheless, a firm is nothing more than a group of people.

Comprehensive insight into a corporation may happen within the context of a large deal, but over time and in normal circumstances, I question how much partners with a law firm, let alone associates, pool their knowledge of a particular client. Law firms organized by substantive legal areas create silos and congeal knowledge; knowledge doesn’t diffuse.

Then, add in the inevitable departures of lawyers and their shifting responsibilities toward other clients, and the presumed collective knowledge pool of the law firm starts to leak. Clients do not want to pay for lawyers in a firm to combine their knowledge of the company other than during a specific deal.

General counsel promoted to CEO. Susannah M. Kim, in her article “Dual Identities and Dueling Obligations: Preserving Independence in Corporate Representation, 68 Tenn. L. Rev. 179, 206 & n. 109 reports that “[m]any lawyers actively seek to join the ranks of senior management and leave the law department altogether. Studies have shown that in recent years, there has been a 100% increase in the number of CEOs who began their careers as lawyers.” This was cited in Deborah A. DeMott, “The Discrete Roles of General Counsel,” 74 Fordham Law Review 955-981(2005) (See my post of Jan. 27, 2006 on GC promotions.)

Independent board counsel. Having read that Rite Aid’s audit committee began an investigation and retained its own counsel and a forensic accountant (Deborah A. DeMott, “The Discrete Roles of General Counsel, 74 Fordham Law Review 955-981 (2005), I began to wonder where that right of a board might end up. Isn’t it possible that a board or a committee could interest itself in almost any activity of the company? If so, why not hire separate counsel? What happens if those lawyers disagree with the legal conclusions reach in-house or by the firm retained by the law department? (See my two posts of July 25, 2006 on independent counsel to the board.)

Law department training programs. The Viacom law department is responsible for “a novel in-house ‘Corporate College’ – an accredited CLE program that offers Viacom’s lawyers customized courses, InsideCounsel, Feb. 2006 at 59 (See my post of Feb. 1, 2006 on morsels and posts cited.).

Rapid growth of some law departments. To my posts on Google’s law department (Nov. 19, 2005) and TXU’s law department, add Home Depot’s. From April 2001, when general counsel Frank Fernandez took over, the 20 lawyers then at the company grew to almost 60 lawyers. Since about 11 of the original group left, that meant adding more than a dozen lawyers a year for nearly five years! (InsideCounsel, Feb. 2006 at 66)

The critics of structures where lawyers report to the head of a business unit – decentralized reporting – stress the risk of those lawyers’ loss of independence. The pressure to please your boss, the allegiance the lawyer feels toward their business, the bonus that depends on the business meeting its numbers – all these compromise professional integrity and insidiously cause the lawyer to “go native.”

The retained partner, by contrast, can stand up to legal wrong-doing, ask the tough questions, protest the shredding, and if the client persists in retrograde behavior, resign. Not being on payroll and needing a job, outside counsel stands strong with objectivity and independence.

The critics raise a valid concern, to be sure, but I note countervailing points. The inside lawyer knows the business and its managers much better than can any outside counsel, and being in the next office is at least in a position to spot and re-direct early on an improper decision. As for outside counsel, if Global Corp. is your biggest client and your “$2 million a year in billings,” if it is the client that made you partner the determinant of your year-end distribution, isn’t that realistically the same pressure as the inside lawyer with her job; neither lawyer gives that up without enormous pressure, efforts to rationalize, delay and hope, and huge personal difficulty. When a partner has a concentrated basket of business, the large client compromises that partner’s professional integrity.

Valentine’s day deserved a heart-warming, feel-good hug of an item – but look what turned up.

On the internet, “general counsel” and “love,” produced a heart-stopping 803,000 hits. Too much love. So I tried “general counsel” and “valentine,” which dropped the hits to 106,000. Still overcome by emotion, I narrowed the search to “general counsel” and valentine’s day, with 36,900 hits, although “valentine’s day” lopped some off to 33,800.

In the end, unsatisfied in my quest for a romantic piece on CLOve (sorry), I shot Cupid’s arrow at “general counsel” and “valentine’s day” and “love.” The 2,270 hits seduced me into scanning several pages, but my search was unrequited. No warm and fuzzies, no tearful affection, no nothing.

Broken hearted, all that is left of my on-line ardor are these cold factoids.

Bonuses in law departments are not a sure thing. When recruiting lawyers, those who do so owe it to candidates to accurately describe the likelihood of the new lawyer receiving various bonus amounts. After all, sometimes bonuses dry up. This boom-or-bust uncertainty is not the only lash of bonuses.

A second drawback needs some history. For a number of years, I (and others) have thought the trend was to move more in-house compensation toward bonus and away from base. Many applauded that at-risk orientation as a prod to more productivity.

A counter to that shift – the undue influence problem of bonuses – is that linking a lawyer’s pocketbook to business outcomes can erode that lawyer’s professional objectivity. To the degree that the law department is a risk control function, you hardly want to encourage bonus-seeking lawyers to wink at legally-risky business ventures. (See my post of Nov. 24, 2005 on weighting the determinants of bonuses.)

A third downside of bonuses involves perceptions (or realities) of internal inequity. It galls lawyers to find out or guess that they have worked as hard as someone else, and done as well, but the other lawyer got a bigger portion of the bonus pool.