For your next retreat, give some thought to inviting the general counsel from a leading company within your industry to present to your law department. He or she need not prepare PowerPoint slides but could offer experiences and observations about either legal issues that face that company’s law department or its management issues. In fact, the more interchange there is in such a session, the better.

A session keynoted by such a speaker gives members of the law department an opportunity to hear and ask about a similarly-situated law department. If there is any exchange at all about approaches, the invited general counsel is likely to learn something new and the law department will have a method of corroborating or challenging its own practices (See my post of Sept. 22, 2005 law department retreats.).

A disproportionate amount of attention is paid to alternative fee arrangements; perhaps because they are disembodied control mechanisms (See my post of April 19, 2006 on depersonalized decisions.). It is appealing to law departments to think that a fee arrangement brings discipline and savings on its own. The cruel fact is, however, that arrangement on bills probably stands about fourth in a list of what effectively controls outside counsel costs.

From my experience, the first line of managing costs is to retain an experienced partner whose team is busy. The second most effective tool is an inside lawyer who manages the matter actively, creatively, and boldly. Budgets, carefully reviewed and thereafter enforced, are one tool of the active managing lawyer. Third is the most common source of outside counsel spending – litigation – is an effective program for the scourge of discovery. If any of these three steps are taken poorly, don’t expect the fee arrangement to bail you out.

When a law department and a law firm agree on bonuses for the law firm if the firm accomplishes certain objectives, it is to be expected that the law firm will try to perform such that it earns the bonus. All well and good, unless it becomes apparent later in the matter that the sought-for objective no longer benefits the company. Success on a motion for summary judgment may make sense as a goal at the start of a case, but as events turn out may cease to be a desirable objective. The law firm’s pursuit of its financial well-being should not thwart the client’s emergent best interests.

Even with this caveat about alternative fees, we should recognize that hourly billing serves also to drive strategy and firm performance. That which takes longer to accomplish may look more attractive to the firm; research into legal nooks and crannies has its appeal; and avoidance of early settlement may cut against the financial interests of the client.

In short, money changes behavior and you may get what you wish for.

Ron Denton, the Business Services Manager for the Legal Department of ConocoPhillips, is the subject of an interview in Met. Corp. Counsel, Sept. 2007 at 56. The interview struck me as an advertorial for a particular e-billing vendor, but it does contain the following quote by Denton: “Our focus has been on reducing litigation lifecycles because that is really the best way to manage cost.”

The best way? Are efforts to close cases even particularly meaningful? A corporation that is a defendant mostly can certainly disgorge large settlements promptly and claim victory on “cycle time,” but that is silly. Sometimes the defense does not want to awaken a somnolent plaintiff. Most crucially, it costs money to push aggressively. I agree, if a case just hangs around, with the tap of billing turned on even at low flow, it is wise to finish the matter off. But to single out how long cases last as a crucial cost driver?

Or perhaps I am focused on the wrong end. If a company can shunt many claims into ADR, and put off the day of litigation even starting, perhaps that is what is meant by shorting litigation length.

The Wall St. J., Sept. 15, 2007 at R6, explains a technology that helps people strike up conversations. Each person wears an electronic name tag, which contains a whole range of information about the person’s background, skills, job experience and interests. When a person approaches someone who has related characteristics – same school, same city lived in, same pet, or whatever – the badges light up and flash a welcome.

The article’s example is that the flash says, “Hi, Bob. We should be talking about biochemistry.” What a fascinating trick! Perhaps large law departments, who every few years bring together many strangers, might try this technique to overcome shyness and bridge separation.

An online poll by a leading trade journal, InsideCounsel, Sept. 2007 at 13, asked its readers “Have you ever used Six Sigma to better manage your department?”

The brief item does not state how many people responded, but does say that 18 percent answered “yes,” 55 percent answered “no,” and 27 percent answered “don’t know.” I interpret the “don’t know’s” as negative since if they had heard about a Six Sigma project the respondents would not have answered this way. Second, because the question extends many years back in time, even the approximately one out of five respondents who answered “yes” could have been thinking of a project a number of years ago, rather than a relatively recent initiative.

It is also apparent that more than one person from a law department might respond, which means that a large law department that had a visible Six Sigma program might account for a disproportionate number of “yes’s” (See my post of Sept. 5, 2007 on probability-weighted samples.). A methodological purist might point out that those who have experienced Six Sigma might be more prone to respond to this survey than those who had no knowledge of it or had found it not useful. Finally, it is possible, I suppose, that Six Sigma techniques might be used in a law department for some purpose other than to better manage it. I can’t think of a situation, but I suppose that is possible.

InsideCounsel, Sept. 2007 at 11, has an ad by LT Online Corporation, a provider of a leading matter management system. A few comments:

1. The ad pictures and quotes a lawyer from MetBank, a law department that uses the advertiser’s software, LAWTRAC (See my post of June 11, 2007 with two references about law departments in advertisements.).
2. The lawyer in the ad is not the general counsel of MetBank, apparently, because her title is “Corporate Counsel.” Why wouldn’t the vendor want to have as its spokesperson the user’s most senior lawyer?
3. The quote states that “LAWTRAC has paid for itself.” As I have mentioned before, I do not know how law departments calculate return on investment for matter management systems (See my post of Sept. 28, 2007 on ROI and eight references cited.).
4. Finally, I found it odd that the ad cites the predecessor of InsideCounsel, from issues way back in July of 2002, 2003 and 2004.

Economists think in terms of a return on assets invested and use “Return on Investment” or “ROI” as their shorthand (See my post of March 26, 2006 on other terms used by economists that bear on law department management.). This blog has often used the term or the concept, but rarely in a commendatory way (See my posts of May 1, 2005 on bill review software; May 14, 2005 on knowledge management and ROI; May 14, 2005 on projecting savings from initiatives; July 31, 2005 on the implausibility of some ROI calculations; Feb. 17, 2007 with comments on products and services; Nov. 19, 2005 on Google’s early ROI in the law department; and Jan. 14, 2007 with GE’s claims.)

Put bluntly, I do not trust prognostications of future savings because too many assumptions and interests intrude.

I have written on the ROI of major initiatives (See my post of June 16, 2006 on the ROI of various management actions.). While I am four-square behind law departments that try to think through costs and benefits, both elements are very squishy.

Vendors of software are quick to provide you with references, but those may be hand-picked accounts that are highly unlikely to say anything other than compliments.

Far better to scout around and find users of the software that the vendor did not provide as references. Question the vendor’s reference accounts about other licensees and then talk to the others. Experienced consultants can also provide names, as might the vendor’s website.

Once you find another client of the vendor, ask the person who uses the software the most you’re probing questions. High ranking lawyers have views, but from the operational side of things, the person in charge is the best source of information. Above all, ask them what they do not like about the software and what they like about it. Ask them about the support the vendor provides. The insights of actual users are by far the most valuable information you can collect before you make a selection.

The worst thing to do is to allow a vendor to show you its prepared set of capabilities and examples. Get away from the canned brilliance and forage in reality.

Give the vendor a short script of exactly what you would like to see in the order you would like to see it. Ideally, give them some of your scrubbed data so that what they show you looks realistic. For example, with a matter-management system ask for a walk-through from the creation of a matter to its close. During a demo of a document management system, look at how easy it is to create a new version of a document.

Additionally, take advantage of webinar demonstrations, which save money and time and therefore allow you to have more users get a sense of the software’s ease of use. If possible, take advantage of a trial period to test the software’s capabilities on your own. Earlier, I offered five additional tips (See my post of April 27, 2006.). Immediately after the demo ends, while impressions are fresh in your colleagues’ minds, have them complete an evaluation form