It is often thought that a partner who bills at $600 an hour will accomplish a given task more quickly – and presumably more expertly – than an associate who bills at $300 an hour. The judgment and experience of the partner justifies the hourly rate that is twice as high. This assumption generally holds.

What doesn’t hold is a similar assumption for partners of the approximate same experience and firm size but in different cities and therefore who bill at different rates. Consider these instances. Partners N in a 100-lawyer New York City firm, D in a 100-lawyer Denver firm, and M in a comparable Memphis firm each worked on law review at a good school 25 years ago and each handles mostly large acquisitions and divestitures. Their standard billing rates are $800 an hour for N, $475 for D, and $350 for M.

If someone makes $300,000 in Manhattan but moves to Chicago, it takes only $148,709 to maintain the same buying power. So the cost of living is half as much and the partner billing rates reflect much of that gap. If the Manhattan partner moves to Memphis it takes only $122,635 to reach cost of living parity.

Ceteris paribus never is, but if each partner has handled a similar number and kind of deals. the cost of living in the three cities may account for a large part of the rate differences, not commensurate differences in productivity.

Cybersettle, Inc. offers an online dispute resolution service whereby parties to a lawsuit (or dispute) can use the software as a neutral tool to help them reach agreement. Here is another technology for law departments as well as another cottage industry serving law departments (See my post of July 21, 2006 about the cottage industry and references cited.)

A short item in Met. Corp. Counsel, Nov. 2006, at 68 announces Cybersettle’s strategic alliance with the American Arbitration Association (See my posts of Dec. 9, 2006 on ADR-favoring companies; July 20, 2005 on employee disputes and ADR; and Nov. 17, 2006 on mandatory arbitration.). According to the item AAA offers not only traditional conciliation, mediation and arbitration facilities but also “online case management tools.” Cybersettle and AAA will link their online services.

Many businesses have an ethics officer whom employees can call anonymously to report a possible infraction. If employees do not want to call someone from their own company sometimes they can call a law firm that handles such reports. Often ethical complaints are reviewed by a committee on ethics and even by the Board. "Practices vary widely about how ethics violations are reported and responded to. Almost always, however, the general counsel is in the chain of analysis and response,” according to Jay B. Stephen, general counsel of Raytheon, in “The Defense Industry, Raytheon and Building a Compliance Culture,” Met. Corp. Counsel, Aug. 2005.

According to Raytheon’s Stephen, “We have an ethics officer who is sort of a progenitor of all the ethics, values, and cultural pieces but is also responsible for most investigations triggered by the ethics hotline inquiries. We also have a chief compliance officer who looks at the more straightforward legal compliance issues. They both report directly to me.”

A narrow interpretation of “legal” would bypass the general counsel when it comes to responsibility for ethics, compliance, and the farther reaches of risk management (See my posts of Aug. 27, 2005 on the general counsel as “reputational risk protector”; Sept. 4, 2005 #4; and Jan. 13, 2006 and McDonald’s scope.). Raytheon has taken one of the broadest interpretations of legal’s role.

A number of surveys have examined what law departments feel are desirable law firm attributes (See my posts of Oct. 31, 2005 on European law departments and 11 attributes; Jan. 30, 2006 on Kirkpatrick Lockhart’s findings about 8 attributes; March 13, 2006 for LexisNexis Martindale-Hubble’s findings on 8 attributes; and Oct. 30, 2006 for 10 attributes according to respondents in the insurance industry.).

These four surveys asked about several similar attributes, but diverged on as many more attributes. Here is a breakdown of the 37 total attributes asked about by these surveys.

Every survey offered cost as a criterion, sometimes in two variations: “fees and budgets,” “value for money,” “cost,” “billing transparency,” and “hourly rates.”

Three of the four surveys asked about expertise, although one separated “lawyer expertise” from “firm expertise” while another included “quality of legal advice” and “quality of commercial advice.”

Three of the four inquired about client service, if client service includes “promptness,” “efficiency,” “responsive,” and “reliability,” which were the four attributes one survey asked about.

Two surveys included reputation, with one of them distinguishing “firm reputation” from “lawyer reputation.”

Aside from the 19 shared attributes categorized above there were 18 attributes asked about by only one of the surveys, which attributes include: “geographic location of offices,” “international capability,” “intangibles,” “knowledge of industry,” “honesty,” “long-standing,” “personal relationship/accessibility,” “added value,” “partner involvement,” “IT/knowledge management,” “communication effectiveness,” “work as a team,” “enjoyable lawyers,” “racial diversity,” “gender diversity,” “proportion of African-Americans,” and “pro bono.”

One can hope that future surveys don’t stick to the same ruts, but travel more deeply into the terrain of what the more important attributes mean in real life (See my post of Oct. 30, 2005 on Fulbright & Jaworski and its data on negative qualities.).

Data I reviewed recently from a number of law firms disclosed that for every additional 100 lawyers in a firm, the average associate hourly billing rate rose $7.00. For every additional 100 lawyers in a firm, the average partner billing rate rose $13.00. That is, as law firms grow larger the average partner rate grows almost twice as fast as the average associate rate. There was more variability in the sample among partner rates -- almost twice as much -- as among associate rates.

What law departments should take from these findings is that (1) the larger the firm the higher the billing rates and (2) divergence shows up much more in the rates of partners (See my post of July 30, 2005 about data on US partner and associate rates.). Bear in mind, however, that stated billing rates are often not the same as effective billing rates.

Patent applicants will soon be able to tap the on-line, collective knowledge of other patent lawyers. The New York Law School Institute for Information Law & Policy has collaborated with the Patent and Trademark Office – along with a steering committee of patent lawyers from Red Hat, GE, Microsoft, and HP – to launch the pilot program around April 2007.

As described in InsideCounsel, Dec. 2006 at 38, the program will invite law departments to expose their patent applications for four months on a publicly-accessible website. Anyone will be able to comment on the applications, especially if they know of prior art or want to add other comments such as a ranking of the claims. The knowledge network will help the PTO examiners more quickly and effectively evaluation applications and qualify the application for speedier processing.

One can imagine something similar for IRS private letter rulings, SEC comment letters, EPA advice, or FOIA requests. Perhaps I am naïve and I certainly do not know the applicable regulatory laws and practices, but if information requests could be redacted of information that identifies the requester, the collective experience of the practice community could add information for the reviewers and the community members could learn from it themselves.

If such public for a for commentary come into existence, the work of in-house counsel who practice in those areas will change. New developments will spread more quickly, comments will become a proactive involvement in the evolution of the law, search tools and online abilities will be more important, and a new source of guidance and learning will be at hand.

Why does the perception exist that career paths in law departments don’t match career paths in law firms? There may be more management roles in a large law firm, such as practice head of the environmental group or partner responsible for marketing, but given a large enough law department comparable roles are available. Once made a partner, there are no further law-firm promotions; other than the rare elevation to general counsel, there are no further promotions for senior inside counsel.

Aside from promotions, however, there are choices along the corporate way. Developmental initiatives mentioned by respondents to a recent law department survey, in Legal Week, Sept. 28, 2006 at 10, included “establishing a career development review process for high-achieving lawyers, introducing new areas of legal expertise and rotating lawyers around the department.” The general counsel of the UK’s Diageo, Tim Proctor, cited his taking two talented people in London and the US and having them switch jobs for a while.

Top-posters reply to a message above the original text; bottom-posters, the opposite. Interleavers reply within the original text; while copiers pick out what they want to reply to and copy it above their response. Law departments may become accustomed to one style or another, usually one that is in accord with the style of the senior lawyer.

The preceding distinctions came from the Fin. Times, Oct. 4, 2006 at 8, which also offers a rule of thumb. “If you are beginning your third or fourth meaty paragraph, consider a white paper … or at least a phone call.”

My personal peeve is with excessive reliance on e-mail, especially long ones that require me to scavenger hunt for the key point or question. Forwarders should delete the extraneous stuff from long chains of messages. Far better: pick up the phone and call!

Data has yet to come to my attention about how often law departments request from their law firms what US lawyers refer to as “formal opinions.” The law firm’s malpractice insurance backs up a firm’s formal opinion letters. Outside of mergers (See my post of Nov. 9, 2006 on UK law firms and liability caps.) and patent infringement analyses, such letters are probably rare.

Less formal second opinions, however, can be sought by law departments at any time and vary considerably in their purpose and cost, but serve mostly to corroborate the internal judgment of law department lawyers. Such comfort is not so rare.

In fact, one cost spigot that a general counsel can turn off is too much checking with outside counsel. Sometimes a firm’s expertise, research skills, and experience across several companies justifies another head, but too frequently done it betrays lack of confidence in the abilities and judgment of the inside lawyers.

The latest issue of Consulting, Vol. 8, Nov./Dec. 2006 at 17, states that at McKinsey, BCG, and Bain, the average consultant receives 81, 79, and 66 hours of training per year, respectively. I’ve not seen data from law departments that states time spent on training.

The consultants’ survey included many of the largest consulting firms in the US and summarized seven methods by which training is delivered (with the average percentages of the firms shown in parenthesis).

Formal in-house training programs (43.1%), professional workshops (17.0%), e-learning/online courses (15.7%), “informal learning (e.g., action learning, job & global rotation)” (12%), software/computer training (5.5%), university courses/academic training (4.3%), and other (2.4%). Law departments rely mostly on external CLE – not done in-house – and the informal, laissez-faire, OJT that is the intellectual equivalent of eat what you kill.