One would hope that the law department integrates its retention letters (See my post of Aug. 24, 2006 that compares these to outside counsel guidelines.), inside guidelines (See my post of Aug. 8, 2006.), and outside counsel guidelines (See my posts of Aug. Aug. 1, 2006 that wonders about their effectiveness; Aug. 9, 2006 about certification by firms; Jan. 10, 2006 with an example.). These three documents should hold hands tightly.

Law departments should also grip these documents with their budget policies (See my post of Oct. 20, 2005 on cascading departmental budgets to practice groups.), and its policies and documents that concern evaluation of inside counsel and outside counsel (See my post of May 19, 2006 on BP’s 30-factor evaluation form.).

A grandiose consilience, without doubt, but well managed law departments take care to assure that all the pieces fit together.

Here is a snippet of data from GC Mid Atlantic, Sept. 2006 at 29-30: "The Esquire Group, a national legal search and consulting firm, reports that its average hourly rate for contract attorneys is $80 per hour, while the average hourly rate of in-house counsel is $108 per hour and outside counsel rates average $185 per hour."

The fact is, contract attorneys have the same hourly cost has employed attorneys, but they do not incur a typical 25-to-30 percent benefits load. As to the rate comparison between in-house counsel and outside counsel, both figures seem low (See my post of Oct. 18, 2005 on how to calculate the former figure.), and the gap seems much larger than other data suggests (See my post of Nov. 16, 2005 and a $190 an hour outside figure.),

LANXESS, a $2 billion spin off from Bayer Chemicals Corp., has four general commercial lawyers and three IP attorneys. The General Counsel, Marcy Tenaglia, has set up the law department of the specialty chemicals business in an unusual teaming structure. The arrangement divides the 15 business units and 8 service functions of LANXESS among teams consisting of one general commercial and one IP attorney. The two attorneys handle every matter as a collective, as if they were twin general counsel for the unit, according to GC Mid Atlantic, Sept. 2006 at 9.

In addition to this structural assignment, the law department has an attorney who is an expert in procurement as well as others who handle health safety and environment, a specialized federal act that pertains particularly to the company, and trademarks.

Among the candidates for a service that lawyers can do but shouldn't, what I call quasi-legal work, would be negotiation. When a company needs to hammer out the terms of a contract, an acquisition agreement or a joint venture, of course there will be legal issues involved; but fundamentally the decisions and how they are reached are commercial trade-offs that ought to be made by a business person.

In many companies, however, lawyers are skilled in negotiation and are asked to do so. Too often time-consuming and stressful negotiations take away from the time of lawyers to do more valuable work.

After being spun off in 2005 from Bayer Chemicals Corp., LANXESS had a legal department of seven attorneys. Not having enough capability in intellectual property the new department obtained from the US law firm Pepper Hamilton several seconded staff. The secondments included “IP attorneys, an IP paralegal and patent agent – on a full-time basis.” The terms of the arrangement are not further explained in GC Mid Atlantic, Sept. 2006 at 9.

The same magazine (at 30) describes how Philadelphia-based Duane Morris recently seconded an associate to its client Minerals Technologies "when the company was short a patent attorney and overwhelmed with work.” The secondee spent six months at Minerals.

Seconded attorneys usually work at lower rates than the firm’s standard rates, and the client and the firm can negotiate all manner of flexible time and fee arrangements that benefit both parties.

"Unlike contract attorneys who generally work for one client at a time, seconded attorneys have ongoing matters that may flare up during their secondment, taking them off the job and leaving clients scrambling for replacements.” It is also important to decide in advance whether a replacement attorney will be provided during the secondee’s vacations or unexpected absences as well as, according to the article, to provide for the payment of recruiters' fees if the secondee is hired away by the client. Why? Do law departments pay their firms placement fees if they otherwise hire associates or partners?

Settlements in cash. One major manufacturing company’s senior litigator estimated that 95 percent of the company’s settlements were cash (See my post of Aug. 1, 2006 on some settlements not being monetized.).

States adjudged best and worst for plaintiff tort lawyers. InsideCounsel, July 2006 at 17 reported the Pacific Research Institute’s annual ranking of the best and worst state tort systems in America. Such rankings should not be accepted lock, stock and barrel (See my post of May 17, 2006 and the US Chamber of Commerce ranking; but then my posts of June 6 and 7, 2006 with methodological attacks on it.). The Institute looked at 39 variables to come up with its rankings. The states with the worst tort systems were Vermont, Rhode Island, New York, Pennsylvania and Maryland. The best states, according to the free-market think tank, included Texas, Colorado, North Dakota, Ohio and Michigan. Do you suspect any political correspondence?

Another psychometric test. The Birkman Method® personality profile, partially funded by the National Foundation for Science, helps students clarify their true interests, motivational needs, preferred operating styles and potential stress behaviors. The Birkman has been applied to high level executives in many of the world's leading organizations (See my posts of Oct. 21, 2005 about less than serious uses of psychometric tests; April 27, 2007 on their use to screen applicants; and April 9, 2005 on thinking styles and such tests.).

Thar’s gold in these here posts, for readers interested in digging for business opportunities. For example, someone could collect evaluations from a number of law departments and sell access to the database (See my posts of May 14, 2006 and July 21, 2005.). Someone could improve search powers (See my post of June 30, 2006.) while others might prepare machine-readable invoices (See my post of Sept. 22, 2006.). Someone can set up a prediction market (See my post of Feb. 15, 2006.) or trade stock based on event studies (See my post of May 4, 2005 about patent litigation.). Online repositories of knowledge are another set of business opportunities discussed on this blog (See my post of Feb. 16, 2006 about wiki technology.).

More broadly, all of the cottage industries that swirl around legal departments evince entrepreneurial energy (See my post of Sept. 18, 2006 with an overview.).

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The most compelling reason for a law department to tell clients about its services is to fulfill its role – to help the business succeed and reduce legal risks. So preventive law training programs may have the effect of marketing but the purpose of role-accomplishment (See my post of April 13, 2006 about Phillips and anti-trust training.). There can be other consequences when a law department tells managers of its capabilities and services (See my posts of Aug. 1, 2006 on second-order consequences and Aug. 28, 2005 on unintended consequences.).

Marketing can raise or lower client satisfaction. Raised scores derive from client appreciation for what the law department offers. Lowered scores result when client expectations rise but performance does not match (See my post of Nov. 21, 2005 on satisfaction surveys raising expectations.).

Marketing is aimed to build public relations and good feeling. Newsletters by law departments invariably tout the successes of the department (See my post of Sept. 4, 2006 about them.).

Marketing serves the law department’s professionals’ need to attract interesting work. If clients appreciate that you know how to improve a complicated sub-lease, your real estate lawyers will get more work or get it sooner, and therefore be more professionally fulfilled (See my post of Oct. 18, 2005 on lawyers not wanting only challenging problems.).

When clients understand what the law department can do, the workflow may even out and the overall quality of work coming in may rise. Clients will know how best to use the department and when they can act on their own (See my post of Sept. 14, 2005 on the self-service model.).

These secondary effects of departmental promotion are admirable. To accomplish the department’s mission, to increase the quality of work, to boost the department’s reputation and to increase client satisfaction, all make complete sense. The downside is that marketing may increase workload and amounts paid outside counsel (See my post of May 10, 2006 about the tension between self-promotion and additional work.).

What if law firms create for each invoice a coversheet, one with little bubbles filled in that give a summary, much as tests or SATS that are scored electronically from answer sheets? All of the factual information about an invoice could be electronically coded and read by an OCR device; these facts would include dates, hours, billing rates, initials of timekeepers, and UTBMS task codes.

This idea sounds like electronic billing which uses LEDES (See my post of April 14, 2005 on this standard in Europe and Sept. 18, 2006 about electronic legal invoice delivery.), but would not require special file structures, encrypted communications, and third-party fees.

What couldn’t be scored so easily from bubbles filled in are descriptions of activities. Perhaps there is a way to encode text so that it is as easily machine readable. Our Post Office can do this.

The huge US law firm, Holland & Knight, has a general counsel, Wall St. J., Aug. 30, 2006 at B2, as do many other major firms. Those GC partners serve as the legal advisor to the firm. With the growth of law firms, we will see more inside outside general counsel.

Some of their services may address issues with law departments, such as malpractice threats, discrimination as to the timekeepers who represent the department, billing irregularities, conflicts of interest, non-competes, marketing, or the terms of a fixed-fee agreement. Hence the corporate GC may fence with a law firm GC.