It’s one thing to impose on law firms all kinds of requirements that aim to make them better integrated with the law department and more cost-effective (See my post of June 13, 2006 on designation of core staff; Aug. 22, 2006 on requiring project managers; June 15, 2006 about the use of lower-cost associates; and July 5, 2006 on interventions in law firm management generally.). It is quite another thing to bring the key lawyers together from your key law firms and talk through with them what you expect under what circumstances.

You might try to come to a mutual understanding with your key firms of when detailed legal research is needed, and how to communicate, budget and conduct it. You could set some parameters around oral advice, informal written advice such as e-mails, and formal memoranda of law. All of these topics further the goals of staff use and supplier development.

For more on management of core staff in law firms see my posts of 2005: Nov. 8 on the number of timekeepers on a matter; Sept. 5 on Citigroup’s views; Nov. 15 on timekeepers per firm; and Nov. 21 on staffing profiles; as well as March 28, 2006 about a rule of thumb of one lawyer and one paralegal tracking time; and June 13, 2006 about the vital role of key staff matter.

I’m out on a limb on this, but the view is important. InsideCounsel July 2006 at 52 discusses the results of 407 law department lawyers who indicated whether their department “fired or planned to fire” one of their law firms in 2006. In bold print, the magazine proclaimed: 34 percent!

Wait a numerically-challenged minute! The average department in this survey had 31 lawyers, so at a plausible benchmark of five lawyers per billion dollars of revenue, assume the average department was in a $6 billion company.

Based on my consulting projects, a rough rule of thumb may be that companies of that size pay 25-40 US law firms per billion dollars of revenue, which means that average department perhaps paid around 200 law firms.

Now, back to the trumpeted finding that one-third of the respondent departments fired or planned to fire a single firm (See my posts on Oct. 4, 2005 about loyalty and July 30, 2005 about fear of losing the department’s favored firms.). Isn’t it amazing, but completely contrary to the impression created, that less than one percent of the firms were terminated or might have been in jeopardy?

You just never know when a catastrophe might befall your company, so a number of law departments have prepared a business continuity plan. These plans explain what members of the department should do if there is a major incident, such as terrorism or earthquake, that renders your normal office inaccessible.

A typical plan appoints someone to be the continuity representative. It urges everyone to keep in a safe place away from the office the phone numbers of key business people, as well as whom to call from an interlocking chain of callers, and copies of vital documents that they need to keep working if the office shuts down. Plans outline how to evacuate the office and how best to keep in contact with others and continue to work. They set out the responsibilities of various members of the legal function in the event of a traumatic disorder.

Prof. Hossein Arsham’s website gives a useful summary of the oft-cited chapeaux, from De Bono Edward, Six Thinking Hats: An Essential Approach to Business Management, Little Brown & Co, 1985. The hats are a useful metaphor to push us to weight decisions from various perspectives. The conceit also helps unravel the confrontations that happen when people with different thinking styles discuss the same problem.
With minor edits by me, Arsham explains the hats as follows:
1. White Hat: Focus on the data available and learn from it. Look for gaps in your knowledge, and try to fill them or take account of them.
2. Red Hat: Look at problems using reaction and emotion. Try to think how other people will react emotionally. Try to understand the responses of people who do not fully know your reasoning.
3. Black Hat: Ponder the bad points of the decision by looking at it cautiously and defensively. Try to see why it might not work. This encourages you to eliminate risks or weaknesses, alter them, or prepare contingency plans to counter them.
4. Yellow Hat: The optimistic viewpoint, it helps you consider the benefits of the decision and the value in it.
5. Green Hat: Develop creative solutions to a problem. It is a freewheeling way of thinking, in which there is little criticism of ideas. A whole range of creativity tools can help you here.
6. Blue Hat: 'Blue Hat Thinking' stands for process control. This is the hat worn by people chairing meetings and who need to push.

InsideCounsel July 2006 at 52 prints the results of 407 law department lawyers, of which about 200 were general counsel, who gave their views on this statement. Far more agreed to it (43%) than disagreed (19%), while 38% claimed to be neutral. Not surprisingly, 84% of the outside counsel who responded disagreed.

The statement and the in-house scores trouble me. If you are in-house and envy the goldmine of outside counsel partners, you too can try to become a partner at a firm. Those who choose a life-style and a work environment should not begrudge others who put up with different pressures (competition, constant marketing, internal politics, thin capitalization, fickle clients, and little or no annuity work) and sometimes make boatloads of money.

Law partners make “too much money” -- compared to whom? School teachers and toll collectors or neurosurgeons and hedge fund managers? Are the survey responses a roundabout complaint about in-house compensation?

Is this really a crise de coeurs, a clumsy moan that profits per partner at big law firms – which represent the crème de la crème of private practitioners, seem obscene? Who by the way pays the bills that swells those millions per partner? If “law firms make too much,” who is in the wrong?

A year ago I wrote about a Corporate Counsel survey (See my post of July 16, 2005 on law firm and law department relations.). This year the renamed monthly, InsideCounsel July 2006 at 52, repeated a question from 2005: “Most law firms pad their bills.” In 2005 36% of the respondents agreed that most law firms pad their bills, 37% disagreed, and 28% were neutral. This year, 42% agreed (an increase of 16% over 2005’s results) and 33% disagreed (an 11% drop), with 24% neutral.

Set aside the ambiguity of “most” and what level and frequency of inflated bills creates a “pad.” Just because the lawyer who reviews a bill knocks something off the bill does not mean that the law firm improperly stuffed it. Could methodological influences account for some or all of the swing toward “agreed” and its condemnation of wide-spread law firm greed? Or, have perceptions drastically soured?

Last year’s survey had 295 law department respondents whereas this years had 407, of which about 200 were general counsel. Let’s not dwell on what is probably a very low response rate (See my posts of April 8, 2005 about employee satisfaction surveys and response rates and Nov. 24, 2005 about client satisfaction survey rates.). Hence, about a third more responded, but what difference that makes, other than giving the 2006 results even more representativeness, I can’t tell. We also can’t tell how many lawyers replied to both surveys. The less the overlap, the more the shift toward suspicion of padding has credibility. Another subject of speculation is the possibility that last year’s survey results raised the consciousness of in-house counsel and that alone bumped up the percentages of agreed to greed.

Methodology may bore some readers, but if we are going to act on metrics, let’s habitually probe them for accuracy. Agreeing with myself, we could probe whether the order and format of questions remained similar. If the 2006 survey had a question before this one implying lower ethical standards of law firms, would there be some spillover to the next question?

An issue of the Nat. L.J. in August 2006 at 8 profiled the general counsel of Mary Kay. Three points caught my eye, two that refer to prior posts on this blog and the headline point. The general counsel, one Mr. Moore, additionally oversees government relations (See my post of Aug. 8, 2006 on this sometimes responsibility of GCs.) and “executive support.” That’s a new one, whatever “executive support” is! The other tidbit brings to mind core competencies (See my post of Aug. 9, 2006 on this nebulous notion.): “International intellectual property law is a staff specialty.”

More important, “Of the 12 attorneys on staff [in the law department], four are foreign-born and half command a language besides English.” Since Mary Kay does business in 30 countries, the cosmopolitanism of its law departments is fitting (See my post of April 27, 2005 about Kodak Europe and its dual- language requirement.).

The factoid suggests that skin color and national origin probably matter less from a business standpoint than understanding different cultures and speaking fluently in languages in addition to your company’s primary language (See my post of Aug. 13, 2006 on symmetrical expectations of diversity between inside and outside lawyers.).

Here are a baker’s dozen of methods to improve the professional skills of in-house lawyers. I don’t vouch for them all, but at the same time there are likely to be many other methods.

1. Executive courses, such as in marketing, finance, accounting and strategic planning. (See my post of May 14, 2005 about a course at Harvard Business School.)
2. Customized training by a university, such as what Wharton is doing for Reed Smith and Boston University is doing for ACC Northeast (See my post of April 12, 2006 about university programs for inside lawyers and several related posts.).
3. Shadow a client for a week.
4. Flip two lawyers for some period of time to exchange jobs, or arrange an overlap of their work in a job share.
5. Rotate lawyers after two or three years in a position. This has the advantage of having the new person challenge old ways of working, break down silos, grow as a lawyer, and accustom clients to a wider group of lawyers.
6. Train the trainer and distribute training at lunches or through communities of practice, for example. Most people learn when they have to teach.
7. Online training (See my post of Dec. 19, 2005 on various methods of training.).
8. Training at internal corporate universities, such as what the sales force does (See my post of July 5, 2006 about online legal compliance vendors.).
9. Law firms come in and train.
10. Investments in flat-fee arrangements with a course provider, like PLI.
11. CLE courses provided by bar groups and professional organizations.
12. Formalized backup training
13. Keep a journal of what you learn and perhaps share it with like-minded colleagues.

According to an October 2005 item by the Lawyer Group, the telecommunication giant “halved its total legal spend since 2000 from almost $400m (£224.1m) to just under $200m; it has also halved the amount it spends on external counsel to $110m (£61.6m). It also cut its in-house legal department from 400 staff to 200.” These are Sweeney Todd cuts!

I am assuming that the company itself did not shrink anything like 50 percent during this time. Some of the management initiatives of Motorola have included the use of offshore resources (See my post of Nov. 14, 2005.), a restructured patent group (See my post of Nov. 13, 2005.), and the appointment of a Chief Governance Officer (See my post of Sept. 10, 2005.).

Robert Half Legal has a pithy comment in a recent release that contrasts generalist skills with the legal specialization rampant in our day. “Today’s GC wears many hats -- legal advisor to the board of directors and Chief Executive Officer, savvy business strategist, knowledgeable interpreter of regulations and statutes, risk assessment expert, as well as visionary and manager of outside counsel. Despite the growth of specialization in legal practice, a GC has to be a generalist.”

This blogger must note one other GC hat: manager of the legal function. I like the quote because it underscores how difficult it is for a general counsel to don all the hats – Bartholomew-like, particularly the high-tops of “savvy business strategist” and “visionary.” To be an accomplished multi-hat GC is a rare feat and my hat’s off to those few.