By spectrum I mean a range of approaches from one extreme to another along a continuum. One such spectrum is how a legal department processes law firm invoices. Extant today is a range that shifts gradually from no review at all because invoices go straight from firms to accounts payable, to some review of bills on major matters, on across to multiple levels of review and recording of all bills – including electronic billing rules and elaborate guidelines together with electronic transmission to accounts payable and sophisticated reporting.

That’s not all. A spectrum exists the next level down. Every lawyer who reviews invoices has an individual style. More, any lawyer may change the style according to the time of day, personal foibles, the law firm involved, the press of work and myriad other factors. Each individual involved in a spectrum process – processing invoices being only one of many – acts on a spectrum.

Now consider the level above. If invoice review is viewed as one element of a broader process – outside counsel management or cost control – then it is one element that is changeable across a set of activities that are themselves on a spectrum.

A "meme" has been defined as “an information pattern, held in an individual's memory or in an outside artifact (e.g., book, record or tool), which is likely to be communicated or copied to another individual's memory.”

Examples of memes that pertain to law departments are ideas (partnering), technologies (docketing software), theories (handle commodity work inside, specialist work outside), practices (charging back outside counsel fees to business units), fashions (third-party bill auditors), techniques (RFIs), and traditions (hire only experienced associates or partners). Memes cover all forms of knowledge, beliefs, values and behaviors that are normally learned from others rather than discovered independently (See my post of Sept. 10, 2005 about sources of innovations (memes) in law departments.).

Memetics, the science of memes, studies the replication, spread and evolution of memes. For readers of this blog, the core idea of memetics is that memes differ in their degree of "fitness", i.e., adaptation to the law department in which they propagate (See my posts of July 14, 2005 and Sept. 13, 2005 on best practices.). Because of natural selection, fitter memes will be more successful in being communicated, spreading to a larger number of law departments and surviving for a longer time. Memetics tries to understand what characterizes fit memes, and how they affect all levels of society.

Mergers of companies with law departments change the mix of law firms retained. The change occurs only in part because the merged law department culls some firms.

For many other reasons a remix of law firms that serve the company might result from a merger. Some of the reasons are the more sophisticated legal problems the larger company encounters favor different firms; the increased skill of the in-house counsel who survive the merger (See my post of Sept. 13, 2005 about the layoffs after the mergers of Oracle and Honeywell.); the relocation of the company’s headquarters; the new constellation of company executives and their preferences; heightened sensitivity to cost control efforts after the merger; and new conflicts of interest among the incumbent firms.

Among the ten lawyers at Palm Inc., one is “on a contract basis because she is working in Germany.” This fact gets no elaboration in the interview of Mary Doyle, general counsel of Palm, published in Law.com In-House Counsel, but the contract basis may have to do with the difficult employment laws of Germany. Or, possibly, the lawyer is working on a trial basis.

Aside from those speculations, note that how a law department classifies contract lawyers can make a major difference in its benchmark numbers. Many of them state results per lawyer (See my post of May 14, 2006 on how problematic this denominator can be.). If a contract lawyer functions interchangeably the same as a full-time employee-at-will lawyer, they should be counted the same. If not, the fully-loaded cost per lawyer will swell, but not for any logical reason. Lawyers per billion of revenue will look better than it should while inside and outside costs per lawyer will look worse.

Truly temporary lawyers, hired from an agency for an expected limited time on a certain project, should be treated differently than a lawyer who is on a contract for reasons having to do with local laws (See my post of Aug. 2, 2006 on Sears and its use of temporary lawyers.).

This blog has more on contract legal staff (See my posts of June 14, 2005 about retaining former employees as contract lawyers; Aug. 5, 2005 on differences between contract lawyers and temporary lawyers and April 9, 2006 on contract staff versus temporary staff; Jan. 30, 2006 on Purdue Pharma’s use of contract lawyers; Aug. 2, 2006 on 20 contract lawyers with the State of Massachusetts; and Oct. 8, 2005 and two contract lawyers at Dial Corporation.).

No general counsel is an island. Each general counsel is connected to and relies on heads of other support groups, and those peer groups have a say in many law department initiatives. If you want to choose a document management system, you must come to terms with Information Systems and its protections, prices and policies. If you want to change how you evaluate lawyers, Human Resources will have a view on content, consistency, scales, levels and timing. If you need different data captured about legal spend, Finance may or may not be able to comply. Internal Audit may have something to say about your hoped-for e-billing system. Despite your protests, you may find that Facilities imposes or prohibits cubicles for paralegals.

Even if one of these so-called support groups functions does not block your progress, they can certainly slow it down.

Of course, you wouldn’t want to hear what they say about the law department!

Most general counsel who profess to control their outside counsel costs admire rebates or discounted hourly rates (See my post of April 23, 2006 on rebates compared to discounts; Oct. 31, 2005 on British practices and low-balling; but see my post of Sept. 10, 2005 on the scarcity of discounts in real life.). Discounts on standard hourly rates are as low-lying fruit as they are low value.

Nevertheless, general counsel persevere:

even though it is not possible to prove savings (See my posts of May 4, 2005; and Aug. 24, 2005 savaging discounts on hourly rates.);
even though the assumed benefits slip away over time (See my post of Dec. 19, 2005 on UTC’s experience.);
even though other methods have more effect (See my post of Sept. 5, 2005 on Citicorp’s GC and discounts.);
even though tiered discounts can warp usage of a firm (See my posts on tiered discounts of March 24, 2005; Aug. 13, 2006 on tiers not based on volume of fees; Nov. 22, 2006; and both Nov. 27, 2005 and Aug. 8, 2006 on retroactive application.);
even though discounts for volume favor larger law firms, which have higher base rates (See my post of Aug. 9, 2006.);
even though “standard rates” may be very slippery, like room rates in hotels (See my post of Sept. 4, 2005 and GE’s auctions.);
even though lawyers and others in law departments still have to carefully review bills (See my post of Sept. 14, 2005 on the time demands.);
even though firms continue to work on what remains essentially a cost-plus basis (See my post of May 26, 2006.);
even though law firms might seek compensatory concessions for granting a discount (See my post of Oct. 29, 2006.); and
even though the readiness with which firms concede discounts might cause general counsel to wonder about the actual savings that result (See my post of July 30, 2005 on 5-10% discounts being normal.).

It’s just too easy to command discounts and then bestride the aircraft carrier and crow “Mission accomplished!”

My post of May 3, 2006 rounded up 32 of the usual suspects, both words or phrases, and my sweep of Aug. 26, 2006 nabbed 10 more. Still, a number of definitions remained at large, 13 of which I have captured below with the reference in parentheses to post or posts that discuss them – all in arresting prose.

Administrator, office manager, head of operations, etc. (Aug. 1, 2006)
Claims (June 15, 2006)
Commodity legal services (Sept. 13, 2006 and March 13, 2006)
Competence, personality and emotional intelligence (Nov. 13, 2005 and July 14, 2005)
Independent counsel for the Board of Directors (Nov. 24, 2005 #3)
Large law department (June 27, 2006 -- more than 21 lawyers)
Legal risk (June 5, 2006 and Jan. 13, 2006 for “risk” and “uncertainty”)
Productivity (Aug. 8, 2006)
Quasi-legal services (July 21, 2005)
Outside counsel guidelines and retention letters (Aug. 24, 2006 and Sept. 25, 2006)
Small matters (March 13, 2006)
Statistical terms (Nov. 30, 2005 – average, median, mode; June 30, 2006)
Talent, capability, skill and passion (July 14, 2005)

The one-time European General Counsel for Eastman Kodak, Helen Fletcher Rogers, left that position around 2004 and became a consultant with UK-based Lawyers in Business, "an organisation dedicated to ensuring in-house lawyers are able to make a real contribution to their businesses."

Lawyers in Business were described on the web site of Totallylegal as running "a series of workshops from lunchtime networking seminars to morning and afternoon classes." (See my post of July 31, 2005 on former general counsel who tried or became consultants to law departments.).

CAGR is an imaginary number that describes the rate at which an investment or expenditure, such as outside counsel payments, would have grown if it grew during a period of time at a steady rate. Thus, if a legal department paid of $10 million to outside counsel in 2005 and five years later paid $20 million, then its spending grew 100 percent. True, but what was the smoothed-out rate of increase each year?
Here’s the answer, courtesy of the general formula for calculating CAGR:

CAGR = (ending amount / beginning amount) (1 / # of years) – 1

Thus (20/10) times raised to the power of 1/5 (.2) and subtract from 1 leaves the CAGR. In Excel the cell that calculates this contains =((20000000/10000000)^.2)-1, where the caret (^) is the POWER function. The compound annual growth rate was 14.9 percent. In other words, if the department had paid a steady 14.9 percent more each year during the five years, the $10 million would have swollen to $20 million.

General counsel who comfortably understand and use CAGR to describe their spending not only have a more nuanced understanding of run rates but also speak the language of their fellow business executives.

Many companies operate in more than one market segment. Nevertheless, benchmark surveys treat them as if they operate in only one, in only one industry. How can benchmarkers accurately categorize General Electric, MetLife or Johnson Controls, to name only three companies that have varied operations?

One methodology asks the companies in a benchmark survey to identify their various revenue components. Then, weight the data according to how large a particular component’s revenue bulks in the overall revenue of the company. A company that is 40 percent manufacturing would have its metrics count for more in a manufacturing industry cut than another company where manufacturing accounts for only 20 percent (See my posts on weighting factors of Nov. 24, 2005 regarding the determinants of bonuses; March 25, 2005 and May 31, 2005 regarding client satisfaction scores; Aug. 30, 20065 regarding grid analyses for decisions; Nov. 15, 2005 and Aug. 20, 2006 regarding outside counsel performance; and Nov. 30, 2005 regarding weighted averages generally.).