From a recent directory, the NJ Legal Almanac, Aug. 2006, I looked at size and location statistics for the 17 largest law firms based in New Jersey and the law departments of the 19 largest companies headquartered in New Jersey.

The median percentage of lawyers at the firms who are physically based in New Jersey is 98 percent, whereas the law department median is 69 percent; the respective averages are 92 and 71 percent (Honeywell at only 24 percent in-state brings down the corporate average, as did Wyeth (41%) and Chubb (53%).

As to sheer number of lawyers, the firms averaged 92 lawyers, while the 17 largest departments averaged 50 lawyers, a bit more than half the size (See my post of Aug. 14, 2006 about large departments lagging large firms in size.).

If New Jersey is representative, a provable but conjectural if, in-state law firms may commonly be approximately 50 percent more geographically concentrated than the largest in-state companies’ law departments, and have something like twice as many lawyers. If so, law departments that want to retain nearby counsel have ample choices.

According to the Wall St. J., June 13, 2006 at A3, one of the insurance companies covering Purdue Pharma’s defense of nearly 1,400 lawsuits over OxyContin, Purdue hired 40 law firms in 32 states to fight the claims. Perdue's legal team included 322 partners, 849 associates and 1,023 paralegals. All told, that army of legal talent billed more than 1.2 million hours, and more than $400 million in defense costs (a blended rate in the mid-$300 dollar range).

The amount and scope of this defense team's effort is daunting. A question, though, arises: when an insurance policy covers litigation costs, how does that coverage reflect itself in the law department’s budget for outside counsel (See my post of Jan. 30, 2006 about Purdue Pharma’s use of contract lawyers.)? Of deeper significance even is the issue raised by the dispute between Purdue and its carrier over the costs of defense: how much control do insurers have over how their clients’ litigation is handled?

According to David Sirota, chairman emeritus of Sirota Survey Intelligence, employee attitudes can have a marked effect on productivity. In the NY Times, Sept. 2, 2006 at C5, he singles out three things that especially pump up employee enthusiasm: "Fair treatment, such as equitable wages and benefits, a sense of achievement or pride in one's job and performance and company, and camaraderie among co-workers."

This trio of motivators makes sense (See my posts of Feb. 8, 2006 on the buddy system at Cox Communications and references cited; but see April 13, 2006 on low ratings for colleagues; July 14, 2005 about equitable and transparent pay schemes; Nov. 27, 2005 on how to supervise lawyers; and Aug. 26, 2006 on 13 ways to build professional skills.). If a general counsel wants happy campers, and the creativity and high performance-level that pours out from an enthusiastic team, look to how they view their pay, their pride, and their work pals.

Gill Hague, a consultant and director of Legal Project Services Ltd., sent some numbers from a Law Society report on lawyers with a Practicing Certificate in central government departments (See my post of April 13, 2006 for more on Hague’s dissertation.). The Law Society – Britain’s equivalent to the American Bar Association – reported 90 lawyers in Government Departments, 125 in Courts, 210 in Government Funded Services, and 1,697 in Crown Prosecution Service.

Hague points out that “there may be other legal professionals – such as Barristers, or qualified Solicitors whose role does not require them to have a Practicing Certificate – working in the employed sectors.”

He closes with mention of a certification that has no counterpart in the United States: “many local government staff in work areas such as Property and Litigation hold other legal qualifications such as Fellowship of the Institute of Legal Executives."

Not only has InBev embarked on an ambitious training program (See my post of Nov. 24, 2006 on its academy.), but two other talent-development efforts in the UK are running along side.

In the summer of 2006 the Commerce & Industry Group's London branch launched a mentoring scheme. According to LegalWeek, Aug. 31, 2006 at 3, a dozen high-profile general counsel have agreed to mentor twice that number of junior in-house lawyers (See my posts of April 30, 2006 on the looseness of the term “mentor”; and July 14, 2005 on the difference between a mentor and a coach.).

While I admire the thrust and the collective effort, I am a bit taken aback because a mentor is usually assumed to counsel someone through the briar patches of the mentee’s company, something which a general counsel in another company could not effectively do

Meanwhile Nick Deeming, group legal director of BOC group, has been thinking through plans to launch the UK's first MBA tailored specifically for in-house lawyers (See my post of April 12, 2006 on somewhat similar development programs in the US.).

If a brainstorming session falls short of its participants’ goals, “most often it is because someone hijacks the topic at hand, tries to prove everyone else wrong, works to impress the superiors who are present, or just plain blathers for his own enjoyment," according to the Wall St.J., June 13, 2006 at B1.

If your law department chooses to conduct a brainstorming session, apply these four lessons. Require the participants to write down their ideas privately and bring them to the session. Have someone collect the ideas and read them without attribution, so that evaluations of the ideas are not influenced by the idea person’s rank. Research referred to in the article found that group brainstormers perform at about half the level of the same people who brainstorm alone. as measured by the number and quality of ideas generated.

Third, hire an outside facilitator (See my post of Oct. 30, 2006 for this suggestion and two other points: have rules and push participants to prepare ahead of time.). A fourth step asks the participants to mull over afterwards what they learned during the brainstorming session and share their thoughts (See my posts of Nov. 28, 2005 on the advantages of mind-mapping software during brainstorming sessions; and Dec. 9, 2005 on the related Delphi technique.).

This blog speculated that accounting for option grants as a deductible expense, a rules change that took effect in 2005, would hurt the ability of law departments to attract new hires (See my posts of Nov. 14, 2005 related to demographic changes and April 30, 2006.). This blog speculated wrongly.

A study reported in the NY Times, July 16, 2006 at BU5, "finds no evidence that the accounting change has had a dampening effect on the number or value of options that the average publicly traded company grants to its executives." Not only did the sheer number of options granted not decline, but also neither the number of years before the options expire nor their strike price -- the price over which the underlying stock must rise before the options have value -- did not change.

For more on different aspects of stock options, see my posts of Jan. 27 and April 23, 2006 on option costs included in departmental budgets, as well as Aug. 3, 2005; Jan. 17, 2005 on the Black-Scholes formula for valuing options and Jan. 24, 2006 on software to calculate it; March 28, 2005 on stock options as one reason to go in-house; July 5, 2006 #2 on the value of options granted to Yahoo’s general counsel and Feb. 1, 2006 on their value granted to Texas general counsel; Jan. 27, 2006 on grants to inventors who obtain patents; Sept.17 and Oct. 18, 2006 on the law department’s role in the task of tracking option grants and exercises.).

InBev, a global drinks giant, has been talking with some of its core law firms about how to set up a three-year training program for the company’s most promising in-house lawyers. The “academy” would have in its first class 15 of InBev’s brightest in-house lawyers to start through a three-year program. The thought is to have the first year focus on technical legal skills, the second year on management skills, and the third year on leadership.

InBev’s general counsel for Western Europe, Deepak Malhotra, unveils this commendable initiative in LegalWeek, Aug. 31, 2006 at 3. He hopes eventually to make the academy available to lawyers at other law departments.

According to Iain Larkin, group general counsel at DaimlerChrysler UK, in LegalWeek, Sept. 21, 2006 at 18, “Statistics prove that, contrary to popular belief, external legal costs increase rather than decrease with the introduction of a legal department." I can well believe that, because some clients don’t even know what they don’t know about legal problems. Having unopened eyes and no one to call, clients just blunder on.

Bring in a lawyer, and people start meeting that lawyer and becoming more aware of legal issues. And, if the lawyer is at all savvy, the lawyer will spot some issues, a few of which will need outside expertise. Hence, add an inside lawyer and watch external costs rise.

Sometimes law departments turn to a law firm not so much for legal advice as for consulting advice. I know of companies where law firms have reviewed and recommended on a law department’s litigation process, on how another one should handle documents in discovery, on processes for dating stock options, and on portal technology.

I am biased, to be sure, but I suspect the consulting projects run by law firms are expensive, target findings and next steps that have substantive legal implications (business development, that is), and misses many of the tools of experienced consultants.

Even so, law firm partners qua consultant is one more resource available to law department managers (See my post of April 5, 2005 on the Association of Consultants to Law Departments.).