One of the attractions for general counsel that application service providers (ASPs) have is that they do not demand much, if anything, from corporate information services. The law department can license and use software without need for internal help.

As noted by Legal IT, June 16, 2005 (John Rogers), most corporate counsel “are generally starved of the investment necessary to develop effective systems of their own.” Enterprise-wide capabilities and profit-making systems far outrank the odd software package that serves a tiny group of employees in a cost center – law department software – so “corporate lawyers often find it difficult to engage the interest or support of their own IT department.”

Open source efforts, where many people contribute without compensation to a shared effort, may mark the next decade of collective law department efforts to obtain and disseminate management information. Open source will take off when law departments devise methods of recognizing contributions by their quality.

Currently, we have proprietary knowledge sources, such as ACC, the General Counsel Roundtable, Practicing Law Company, and the CLO Programme. Against the inexorable sucking sound of the internet, it seems certain that we will eventually have open source on-line repositories of legal management knowledge. Who knows, this blog is part of that future.

Unbeknownst to many general counsel, the perspectives, concepts and terms of economists explain much about how law departments operate. Neither abstruse nor irrelevant, the 14 economic concepts collected below, which could be matched by many more – such as choice theory, comparative advantage, elasticity, externalities, marginal cost, monopoly power, productivity, profit margin, rent-seeking, and transaction costs – offer much explanatory firepower:

1. Behavioral economics (Sept. 4, 2005, Jan. 17, 2006 and others)
2. Diminishing returns (Dec. 21, 2005 and IP spending)
3. Economies of size and scale (Aug. 26, 2005)
4. Efficiency and effectiveness (Oct. 1, 2005 as models)
5. Fixed and variable costs (Feb. 18, 2005)
6. Free rider (March 22, 2006)
7. Game Theory (Aug. 14, 2005; Feb. 8, 2006 and posts cited)
8. Information asymmetry (Dec. 23, 2005)
9. Net present value (May 10, 2005 and litigation expense)
10. Nominal metrics (March 12, 2006)
11. Pareto optimum (Sept. 4, 2005)
12. Prediction markets (Feb. 15, 2006)
13. Principal-agent issues (Jan. 16, 2006)
14. Supply and demand (Feb. 1, 2006 in certain auctions)

A 10-page screed by the executive search firm BCG aimed at law firm lawyers, as it exposes “several little known facts about going in house that may not necessarily make it the best decision for you.” One of the five plagues unleashed by a move from a law firm to a law department is that “your legal skills are likely to deteriorate once you go in house” (id at 1).

By the lights of BCG, “a large portion of the responsibility of many in house attorneys is to farm out challenging work to the appropriate law firms.” Hence, “it is unlikely you will stay abreast of the law once you are in house because you will have no reason to” (id at 8).

BCG is wrong-headed. In the questions of law that matter to a business, internal lawyers become very specialized. And, equally wrong, the ideal inhouse role is not the potted palm, the roundtable for the trains of outside counsel.

Specialized, deep knowledge of an area of law is not the only way to be a quality lawyer. A quote by the UK’s Carphone Warehouse group corporate counsel, Tim Morris, makes the point. “On any given day we might be working on anything from an acquisition to a commercial agreement. That way it keeps everyone interested and it’s a good way of keeping high-quality lawyers.”

A previous post explained the generally-observed seniority of the title Associate over Assistant (See my post of Nov. 8, 2005.) Can we carry that analysis of titles down a level or two?

Among Counsel, Attorney, and Legal Counsel, the higher rank typically is accorded to Counsel or Legal Counsel – which is a less-common title. Above that, a promotion brings with it “Senior” at the start, viz. Senior Attorney, Senior Counsel, Senior Legal Counsel.

In my experience, Chief Counsel indicates a rung above any other lawyer, and denotes primary responsibility for a business unit or function, but not the full panoply of responsibilities of a General Counsel (See my post of March 22, 2006 on the difference between CLO and GC.)

A previous post mentioned some metrics about certified and not-certified paralegals (See my post of March 19, 2006 and the good comment to it.) The US Dept. of Labor, Bureau of Labor Statistics explains some of the levels of legal assistant certification.

“An estimated 1,000 colleges and universities, law schools, and proprietary schools offer formal paralegal training programs. Approximately 260 paralegal programs are approved by the American Bar Association (ABA).” Moreover, “Paralegal programs include 2-year associate degree’s programs, 4-year bachelor’s degree programs, and certificate programs that can take only a few months to complete.”

The National Association of Legal Assistants (NALA) has set standards for certification requiring various combinations of education and experience. “Paralegals who meet these standards are eligible to take a 2-day examination, given three times each year at several regional testing centers. Those who pass this examination may use the Certified Legal Assistant (CLA) designation.”

“NALA also offers an advanced paralegal certification for those who want to specialize in other areas of the law. In addition, the Paralegal Advanced Competency Exam, administered through the National Federation of Paralegal Associations, offers professional recognition to paralegals with a bachelor’s degree and at least 2 years of experience. Those who pass this examination may use the Registered Paralegal (RP) designation.”

Poka Yoka and mistake proofing. Poka is Japanese for "inadvertent mistake". Poka Yoka embraces a group of techniques and an attitude toward quality. The result, aficionados claim, is better product quality and greater participation by workers in efforts to improve your processes, your products, and your company as a whole (See my post of Aug. 27, 2005 on Six Sigma.)

Numbers that cry out to be exposed. One was in a sidebar published in September 2005 by Corporate Counsel and in an advertisement in December from Nextra.

125. “The number of ongoing legal matters in a typical Fortune 500 company, with at least 75 percent of them requiring e-discovery.” I have been unable to locate the source of either metric. The “on-going legal matters” figure especially offends me; for companies of the size indicated, it is bizarrely low. I also suspect that the 75 percent figure is as egregiously high.

Employment practices liability insurance (EPLI). Here is another instance of hedging against spikes in legal fees by having an insurance policy (See my posts of July 20, 2005 on IP litigation insurance, and Nov. 16, 2005 for its availability in Europe; July 30, 2005 on third-party insurance coverage and total legal spending; and May 31, 2005 on insurance where the loser pays the other sides’ fees.). The Insurance Information Institute lists 10 kinds of claims that EPLI coverage can protect against.

I write this blog in part to have my phone ring: “Mr. Morrison, I deeply admire your perspicacious postings and beg to retain you – forget the cost – for the huge consulting project my law department needs done right now.”

That reverie fades, and in fact, according to Robert Denney, borders on delusion. With no hint of compassion, he writes in Law Practice, Vol. 32, March 2006 at 13 that “at least up until now, corporate general counsels (sic) rarely select a firm or lawyer based on what’s in a blog.” Say it ain’t so, Bob!

(As to the sic, see my post of March 22, 2006 about “general counsel” with or without an “s.”).

“Oh, somewhere children play, and somewhere children shout,
But there is no joy in Blogville, mighty blogger has struck out.”

The best way to make good decisions is to ignore what you have invested to date, say for example in your matter management system or the furniture or the library. Set aside thoughts about what you have poured into the hole; think only whether going forward, if you were starting afresh, you would keep the resources flowing to support the asset.

The sunk-cost fallacy refers to how all of us pine too much for money spent and find it difficult to abandon the past’s expenditures: “How can we change our portal after all we have invested in training, software, and customization?” The rational question is more like: “Forget the past. Is this improved portal what we want for the future?”

More than half (56%) of the top 200 US law firms use some shade of blue as the primary color in their graphic identities or logos, says PARTNERS+simons in Law Practice, Vol. 32, March 2006 at 9. Commentary on this stunning finding explains that clients – law department lawyers who are not color blind – sense that blue communicates calm and is associated with royalty and authority (think Big Blue, the Blue Danube, and Blue Bayou).

The 17 percent of those firms that choose shades of red appreciate that to clients this suggests excitement, action and aggression (think the Red Baron, Red Brigade, and Red Alert).

As to the rest of the palette, 7 percent employ a shade of gray, a scant 5 percent use the color of money, and only two have selected the down-to-earth brown.

General counsel, raise a hue and cry; observe the best practice: hire firms on capability not logo color!