Law Department Management

Leaders should be adept at strategic thinking and developing the lawyers who report to them

A survey in 2006 by the Institute of Executive Development and RHR International www.execsight.com asked respondents to choose which characteristics are most important for future leaders to possess. Eight abilities were available to choose from, but two dominated those actually chosen: “strategic thinking” and “ability to develop others.” Where respondents could choose multiple characteristics, those two both garnered 50 percent of the choices.

As this was reported in Talent Management Mag., Vol. 3, March 2007 at 42, the remaining choices and their percentages were “business acumen/business-specific knowledge (38%), “ability to motivate and inspire” (33%), “ability to manage significant organizational change” (29%), “relationship building/networking” (29%), “cross-national/cross-cultural understanding” (18%), and “ability to manage the performance of others” (17%). Each of these capabilities has importance to high-potential lawyers in companies (See my posts of May 14, 2005 on executive courses for high-potential lawyers; Nov. 25, 2006 for the efforts of InBev; and May 7, 2006 for GE’s efforts on behalf of high-potential lawyers.).

Talk to clients, don’t write to them – especially status memos

CounseltoCounsel, Nov. 2006 at 9, quotes Michael Roster, at the time the general counsel of Golden West Financial, in the context of status reports in-house lawyers prepare for clients (See my post of Aug. 1, 2006 on reasons to do and not to do status reports.).

Roster volunteers that “his internal client surveys show that memos receive the lowest scores in terms of keeping the client apprised of legal events.” Memos are boring and they aren’t read until they are relevant, if they are even remembered at that time. Worse, they take time to do well. Far better, Roster says, to talk informally with clients when you want to keep them up to date.

Road blocks that prevent law departments from becoming more closely aligned with business units

As reported in CounseltoCounsel, Nov. 2006 at 9, a survey by LexisNexis Martindale-Hubble/Altman Weil asked the respondents – 138 law departments – to choose among seven obstacles to closer alignment between them and their clients. The respondents could choose more than one of the obstacles (See my post of Dec. 20, 2005 that criticizes such a survey methodology.). The results follow, by increasing percentages of respondents who chose them, and then some comments:

A. “Business units are resistant to using outside counsel we suggest.” (6%)

B. “The law department is not organizationally aligned with the client organization.” (10.3%)

C. “Other” (14.5%)

D. “We are perceived as deal breakers rather than deal makers.” (20.5%)

E. “Geographically dispersed locations make it difficult.” (27.4%)

F. “We are perceived as a road block – ‘Don’t send it to Legal; it takes too much time.’” (33.3%)

G. “The law department is brought into the picture too late – at the 11th hour.” (75.2%)

As to A, if clients and inside lawyers were more simpatico, presumably clients would trust the decisions of the lawyers to retain external counsel, would trust the quality of the firms chosen, and would accept the additional costs passed through to them. Shatter any of those confidences and alignment suffers.

With B, the explanation for misalignment might be that the department has not assigned a lawyer to be chiefly responsible for each major business unit (See my post of Oct. 14, 2006 on SPOCs – single points of contact; March 23, 2006 on SPOCs at PPG Industries; and March 17, 2007 on disadvantages.). This obstacle overlaps with geographic dispersion (E), which is also a structural issue.

D and F at first seem repetitive, but D goes to risk aversion while F goes to slowness (See my posts of April 12, 2006 on risk aversion and personality styles; Jan. 16, 2006 on the principal-agent aspect of risk aversion; Oct. 18, 2005 generally on lawyer on risk aversion; and Dec. 17, 2006 on Type I and II errors.). Both warts are savaged in most client satisfaction surveys. The deeper point is that “alignment,” a term not defined, appears to loosely cover whatever clients don’t like about law departments. I use the term “alignment” more in terms of whether a law department’s organization matches the organizational model of its client.

To conclude, G follows from all the preceding choices: cost concerns and confidence in judgment, an organizationally orthogonal structure, as well as conservativism and tardiness of lawyers. Clients put off the unpleasant necessity (See my post of March 20, 2007 on the inevitable price of dealing with the legal team.) until moments before midnight.

Software principally or only used by law departments

Every manner of software is used by some law department, somewhere. Much of that software has company-wide application, such as word processing, document management, spreadsheets and e-mail, not to mention all the operating system and network products, and offers nothing unique to law departments.

A handful of applications, however, run only or principally for the benefit of law departments (See my post of Jan. 25, 2007 on GM and nine applications.). What might be considered law-department specific includes software for board portals, corporate secretary and subsidiaries, e-billing, EDGAR filings, litigation support, matter management, options tracking, and patent and trademark databases.

This blog has commented on all these genre (See my posts of Jan. 25, 2007 on board portal software; Feb. 15, 2007 on corporate secretary packages; Aug. 21, 2005 on e-billing and matter management systems; Jan. 4, 2005 on the spreading acceptance of e-billing, March 21, 2007 on law firm vexations, and March 6, 2007 on the modest penetration of e-billing into law departments; Jan. 24, 2006 on EDGAR filings; Sept. 10, 2005 on costs of litigation support software, Feb. 23, 2006 on patents for such software, and Feb. 9, 2006 on the profusion of lit support vendors; Sept. 5, 2005 on myths of matter management software; Jan. 24, 2006 on options valuation and tracking; as well as Feb. 4, 2007 on Honeywell and its patent and trademark databases.).

Midway between generic software and law-department specific software are a few other packages. Extranets, file room software, and document assembly packages are found commonly with law departments but are not exclusive to those sites.

Services that are excluded from the coverage of an RFP process

When they put prospective matters out to competitive bid, such as all lawsuits in a certain region, most law departments exclude some kinds of matters from the scope of the services. For example, class actions might be outside the bundle.

Many law firms are intensely curious about the amount and kind of work that is withheld. They have a suspicion that the highest value work, the work that is not price sensitive, falls outside of the proposal process scope.

Realistically, law departments are better off keeping some unusual work out of the biddable pool if a fixed fee is sought, so that firms don’t pump up their bids to allow for the possibility of an unusual major matter (See my post of Oct. 31, 2005 about smoking out assumptions.). For all kinds of reasons, various considerations may lead a general counsel to turn to a firm other than the bid winner for a high-profile matter. Even so it is a good practice to assure the proposing law firms that the law department will consider them for the excluded work, although not give them a right of first refusal.

An example of the value of matter management data to show productivity

In early 1999 a report went to the Board of County Commissioners for Hernando County, Florida. The 20-page study followed up on an audit of the County’s Legal Services Department. Along with a recommendation for Legal Request Forms (See my post of March 26, 2007.), another recommendation urged the small Department to hire an additional lawyer.

The audit report announced the productivity gains from the additional lawyer’s the first seven months. “"There was a material increase (44%) in the average number of Legal Requests completed each month …. There was a 50% decrease in the average lead time (days to complete) per Request during the … period. Additionally, … the average number of requests that had lead times over the standard 14 day period decreased by 21% during the … period.”

It’s all so neatly tied together, the additional lawyer leading to much work done, done more quickly and within the turnaround time promised. The return on investment from additional productivity can hardly be demonstrated more clearly.

Request for Legal Services forms – pros but mostly cons

An audit report dated January 25, 1999, went to the Board of County Commissioners for Hernando County, Florida. The 20-page study followed up on an audit of the County’s Legal Services Department. For government legal departments especially, and for any small law department, the report has some useful ideas.

One audit recommendation was that the department push clients to complete a Request for Legal Services form. The form would cover any legal services likely to require more than a certain amount of time – not specified – and should have a submission and completion date (at 5).

I question the value of such forms. They could be argued for if a law department feels that clients too casually ask the lawyers to do something, or if clients repeatedly fail to send enough information along and the form reminds them to provide it. But it feels to me like the forms add far too much bureaucratic paperwork, create almost no value as compared to a matter management system, and benefit the law department if anyone far more than clients.

A complement to law firm updates and legal advice

USI Consulting Group's Legal & Compliance department monitors legislative and regulatory changes that affect employee benefit programs. The Group’s professionals analyze the potential impact of these changes and provide recommendations, all guidance that could help law departments respond to new developments (See my post of Sept. 5, 2005 on Countrywide and its efforts to track such developments.). The Group produces a monthly client newsletter, called Benefits InfoSource, and periodic updates.

What interests me is this netherworld: not a law firm, but more than a legal research firm. One can imagine all kinds of organizations that track legal developments, especially in heavily regulated fields, and provide practice guidance and interpretation, yet don’t practice law. Blogs exhibit some of this unclear quality of being professionally polymorphous. Offshore vendors could inexpensively go a long way with this kind of an offering. Law departments should seek out this additional layer of information and counsel.

Online, confidential and low-cost surveys to take the pulse of a law department

An excellent tool for managers of law departments is the online survey. Available for free with company-licensed software, or at low cost from vendors such as Snap and Survey Monkey, the software lets you collect responses quickly and easily, and most packages prepare graphical summaries of the results.

I have used software such as this to collect material for retreats and as part of consulting projects, but there are many other opportunities for its use (See my posts of March 16, 2006 regarding surveys of executives after they consult the department; Sept. 27, 2005 for assessments by lawyers in the department of their leaders’ abilities; and March 26, 2007 to collect insights after a retreat.).

It takes about five months, on average, to fill an in-house attorney position

Data from a robust survey reported in InsideCounsel, March 2007 at 59, gives us some understanding about how long it takes to fill a corporate lawyer slot. The question asked of the law department respondents was, “On average, how long does it take to fill an attorney position?”

More than six months (11.3%)
Three months to six months (57.6%)
One month to three months (27%)
Two weeks to one month (3.9%)
Less than two weeks (0.2%).

As with all multiple choice questions, once you see the data you wish the surveyor had dropped the range choices and instead given choices by number of months: 1, 2, 3, 4, 5, 6, and 6 or more.

Anyway, my guess would be that in the one-to-three month bracket the more common times was closer to three months, while in the next bracket up four or five months would account for most of the hires. If you can accept these assumptions, it looks like the five month mark would be the most representative (See my post of Oct. 6, 2006 on the importance of streamlining hiring decisions.).