Law Department Management

High-tech zeniths and low-tech nadirs of this blog

Topics on this blog have touched on some sophisticated technology (See my post of June 6, 2006 about biometric fingerprint identification; Oct. 18, 2006 on RFID devices for filing; Jan. 4, 2006 intelligent agents; May 15, 2005 on Monte Carlo simulations; Oct. 26, 2006 on bubble-scan bills; March 27, 2005 on artificial intelligence software; April 7, 2006 and neural networks; April 3, 2005 on PDAs; and May 7, 2006 concerning network mapping software.). So far, I haven’t written about keypads for security or bar codes.

Other topics have scraped along the bottom of the barrel of technology (See my post of Aug. 10, 2007 about a spreadsheet for a bare-bones matter management system; April 30, 2006 with a reference to thermofaxes; March 17, 2006 on dictation to stenographers; and Oct. 18, 2006 on shredders.). I have yet to tackle the complexities of anti-glare screen protectors, lava lamps and pencil sharpeners.

Rees Morrison’s Morsels # 55 – additions to earlier posts

A sad statement about depression among lawyers. Bus. Law Today, Vol. 17, Nov./Dec. 2007 at 6, cites a report in the Boston Globe. In short, “lawyers are more likely to be diagnosed with depression than individuals in any other occupation – 3.6 times the norm” (See my post of Nov. 22, 2007 about sadness and legal reasoning.). The short piece focuses on lawyers in private practice, but given the small size of many law departments, adds a troubling statement: “Solo practitioners and small-firm lawyers can be particularly vulnerable to mental stress because they have fewer peer confidants (See my posts of June 28, 2005 about disengaged general counsel; and Aug. 10, 2007 on personality disorders.).

British terms. “charge-out rates” is the equivalent of “hourly billing rate.” (See my post of Feb. 9, 2006 for other British terms and references cited.)

Cost of the firm may be blamed, but more fundamental problems were at work. When law departments say in surveys that they often terminate law firms because of price, they may really be complaining about the law firms’ responsiveness, bad results, or bad predictions of outcomes. They don't feel they are getting value for their money so they blame the price where really it's insufficient value delivered (See my post of Nov. 11, 2007 on the value gap.). This idea that price serves as the whipping horse comes from LEXPERT, Vol. 8, July/Aug. 2007 at 63.

Exempt and non-exempt employees in US law departments

Almost all law departments have a mixture of exempt and non-exempt employees. Lawyers and law department administrators are exempt because they have management responsibility; secretaries, records clerks, receptionists, and messengers are among those who traditionally are non-exempt.

Among two groups of law department employees there can be some grey area although there are guidelines to help determine whether a paralegal works as a clerical or professional. In the TimeWarner Cable law department, according to its administrator, Paul Roy, all the paralegals are exempt because they have a fairly high level of responsibility. In other law departments, some paralegals (or legal assistants) might not be exempt. The second type of employee where there may need to be a determination is the manager of a group of non-exempt employees. The litmus test has to do with the amount and kind of their management tasks.

The major difference between exempt and non-exempt employees is that non-exempt employees must be paid overtime if they work more hours than the statutory maximum and for that reason they must keep track of their time. Overtime is typically time and a half of base pay.

More articles published recently by Rees Morrison

I write articles and periodically on this blog have compiled links to what I have written (See my posts of Aug. 23, 2005 with five articles; Aug. 27, 2005 and six articles; May 21, 2007 and five more; and Aug. 4, 2007 with six recent articles.). The year 2007 has been productive, in part because of my ability to extract posts from this blog, so it is time to pull together my most recent six articles.

Practical Tips on E-billing (NYLJ, March 15, 2007)

Ways to Push Lawyers to Cut Costs (Legal Times, Sept.17, 2007)

Seven Tips for More Effective RFPs (Corp. Counsel, Sept. 2007)

Dueling documents – engagement letters and retainers (NYLJ, Sept. 20, 2007)

Most Favored Nation Agreements (N LJ, Nov. 15, 2007)

Three Key Law Department Benchmarks (Legal Times, Nov. 19, 2007)

Family friendliness in law firms and whether it matters to law departments

By contributing author Jane DiRenzo Pigott, R3 Group LLC jdpigott@r3group.net

The Women’s Law School Coalition is a consortium of the women’s groups at Boalt (Berkeley), Chicago, Columbia, Harvard, Northwestern, Virginia and Yale law schools. They recently published a list of the top 50 family-friendly law firms. The list was developed based on multiple factors and the data was obtained from law firm NALP forms (the form any organization must file to interview at law schools).

Family friendly policies that are viable are an essential tool in law firm recruitment, retention and promotion. But what impact do family friendly policies have on corporate legal departments hiring decisions when they are considering which law firms to hire?

On the one hand, a firm that ranks higher on the list is likely to have lower attorney attrition. While family friendly is not a gender issue, family friendly policies most likely also have a disproportionate impact on women attorneys, and thereby also may assist a firm with maintaining or enhancing its performance vis-à-vis gender diversity.

On the other hand, in-house legal departments and the businesses they service expect a very high level of commitment – the proverbial 24x7 commitment on a moment’s notice. Does this expectation conflict with a law firm being family friendly? The argument is used regularly by law firm partners and practice groups when they explain why family friendly policies cannot work. It is easy to see where the two may not be consistent, but that quick response lacks creativity and realism. The truth is that meeting client expectations and having a life can be consistent if you want them to be, just as they can be inconsistent.

Law departments not always tough on mandatory use of e-billing systems

Early this year, the Legal Electronic Data Exchange Standard (LEDES) Oversight Committee released survey data from 121 law firms. The report notes (at 11) that “24% of respondents have successfully retained a client after refusing to electronically bill at all.”

The report offers no explanation for this fairly high percentage of firms that resisted, but I can speculate. The major reason for that impasse, I suspect, is that the firm had to install and learn a new system, or pay a significant fee, but the firm realized it was likely only to work on one matter (See my post of Sept. 5, 2007 on the use of e-billing only with a department’s primary firms.). Another possibility is that that a fixed fee or contingency fee arrangement had been negotiated. Also, law departments might grant an exemption for a key law firm that has significant clout with the CEO or Board.

Ten tips for how to do better on competitive selections of law firms

Competitive bid processes by law departments to choose counsel have appeared many times in posts on this blog. It is time, therefore, to collect some of my suggestions for how best to carry out such a process.

1. Give as many facts as possible in the RFP (See my post of Nov. 9, 2006.).
2. Ask only what you can use to help decide among the firms (See my post of March 13, 2007 about broad questions.).
3. Consider a second round to narrow down questions (See my post of Jan. 14, 2007 on the winner’s curse.).
4. Send the RFP to the managing partner to avoid squabbles (See my posts of Oct. 8, 2005 and Dec. 3, 2005 about relationship partners at firms.).
5. Hold a proposers’ conference call or two (See my post of March 18, 2007 on teleconferences for bidders.).
6. Prohibit generic marketing material (See my post of April 5, 2006 that lists this among the ten commandments.).
7. Invite ideas in the alternative and with scenarios (See my post of Nov. 8, 2007 about scenarios for bonuses.).
8. Keep the RFP process objective and transparent (See my post of Oct. 24, 2007 about how to treat vendors honorably.).
9. Surface assumptions and address them (See my post of Oct. 31, 2005.).
10. Watch out for superficial impressions of firms (See my post of March 13, 2007 on subjectivity.).

Do law departments want the same things from law firms as law students want?

By contributing author Jane DiRenzo Pigott, R3 Group LLC

“Law Student Building a Better Legal Profession” (“BBLP”), recently strongly indicated what they find important in an organization at which they will practice law:

1. demographic,
2. billable hours expectations and averages, and
3. pro bono participation.

BBLP ranked law firms in six legal markets: Boston, Chicago, New York City, Northern California, Southern California and Washington (DC) based upon information listed on the form filed by each firm with the National Association for Law Placement (NALP). BBLP encourages “those choosing between firms – students deciding who to work for after graduation, corporate clients deciding who to hire, and universities deciding who to allow on campus for interviews – to exercise their market power and engage only with the firms that demonstrate a genuine commitment to their issues.”

Immediately you understand this assertion with regard to diversity numbers as many corporate legal departments focus on it when deciding which law firm to use for a matter, but does the BBLP “report card” assist with this inquiry? The granularity of the report card, which grades each firm separately based on the percents of partners and associates who are women, African-Americans, Hispanics, Asians and LGBT attorneys, is probably overkill when it comes to diversity information that is useful to in-house counsel concerned with that issue as they make hiring decisions.

Moreover, do in-house legal departments care about billable hours or pro bono participation at the law firms that they hire or are considering hiring? BBLP makes the case that they should for the following reasons:

- working long hours negatively impacts judgment,
- inefficiency is encouraged by large billable hour requirements,
- hourly billing does not allow clients predictability in their legal expenses, and
- billable hours demands do not encourage quick resolution of legal matters so the profit motive of a law firm may be at odds with the client’s best interests or desires.

Given the much publicized material increases in associate starting salaries, law firms will need to cover the larger expense with higher billable hours and for higher rates. Should corporate legal departments be tracking the billable hour expectations of their outside legal service providers? Are clients better served by firms with lower billable hour requirements?

BBLP obviously invested much time and effort in this initial report card endeavor. Feedback from in-house legal departments could help them hone their efforts and become a source of valuable information that could be useful when choosing between firms.

Electronic invoice transmission (e-billing) and law firm complaints

The Legal Electronic Data Exchange Standard (LEDES) Oversight Committee issued a 20-page white paper in March, 2007. Much of the report lays out the responses of 121 law firms to a survey about e-billing.

The firms were rambunctious! More than 80 percent of them said that “dealing with billing disputes” was “somewhat challenging” or “much more difficult” with electronic invoices than with paper invoices. That criticism may be directed at the mechanics of how to correct a bill that has been challenged or it might reflect the fact that more bills are challenged.

As to receiving payment, 39 percent felt electronic transmission was “somewhat challenging” or “much more difficult” than paper. Maybe e-billing systems transmit their approved invoices electronically to accounts payable systems and in that handoff lies delay and problems.

A bit more than a third of the law firms said that 75 percent or more of their invoices didn’t require any adjustment. That means, I think, that the software found no rule violations in those bills (See my post of Sept. 18, 2006 on e-billing rules.) and the lawyers who reviewed the bills found no cause for reductions (See my post of May 1, 2006 on lax bill review.). In other words, billing disputes and payment delays nag the firms, but the law departments often find nothing to complain of in the bills.

Trend toward fewer support staff per lawyer?

According to Counsel to Counsel, Jan. 2007 at 6, the law department of Cummins, a $9.9 billion manufacturer of engines, has 21 lawyers but only 9 non-lawyers. Another example of a staffing ratio tilted heavily toward lawyers is Cisco Systems. According to 2005 material from the GC Roundtable, reproduced by Business Integrity at 2, Cisco has 75 in-house attorneys and 37 non-lawyers.

The traditional ratio of one lawyer for ever one non-lawyer are common (See my posts of March 26, 2006 on EMC and the ratio of one-to-one; May 10, 2006 on 160 lawyers and 140 support at the Dept of State; Jan. 25, 2007 on GM with its 107 attorneys and 109 support staff; Dec. 23, 2005 on the ratio of one-to-one in prosecuting attorney’s offices.)

My sense is that the proportion of administrative assistants will decline (See my posts of May 17, 2006 about the proliferation and inflation of titles for this position; and April 23, 2006 about the change in ratios of secretaries to lawyers toward 4 to 1.). A major reason for that decline, and eventual virtual extinction, will be better dictation and voice recognition resources (See my posts of Nov. 20, 2006 on dictation; and Feb. 4, 2007 and Feb. 6, 2007 on word-to-text capabilities.) and the ubiquity of lawyers who can type rapidly and search for documents quickly. Sometimes lawyers who office in the midst of their clients share secretarial support with non-lawyers and those support staff do not show up on the law department headcount.