Law Department Management

Do law-firm brands influence in-house counsel who hire firms?

Legal Week, Vol. 9, Oct. 18, 2007 at 1, describes an ambitious effort to assign a brand value to the world's largest law firms. A professional services association, The Managing Partners’ Forum (MPF), and a consulting firm, Brand Finance, will evaluate around 200 law firms in the study, which is due out by May of 2008 and will be freely available.

The rating of brand value, "designed to measure the intangible value associated with the law firm's name and client links" is likely to take into account "client quality and loyalty and the strength of the management and people." This ambitious venture will give law departments another vantage point when they want to select law firms. After all, brand value of the firm is certainly one aspect. Even more insightful will be assessments of the management prowess of law firms and their staff quality.

The positive benefits to law firms of a widespread good reputation (a brand) has cropped up repeatedly on this blog (See my posts of Nov. 19, 2005 on a patronizing view of law-firm cachet; June 12, 2005 with an assumption that name-brand firms get the nod in very serious matters; Feb. 20, 2006 on how frequently massive lawsuits end up with well-known law firms; Sept. 10, 2005 on brand-name firms; June 11, 2007 for a neuroscience basis for a well-known brand’s sway; June 10, 2007 on alternative billing gaining less traction with household-name firms; and May 27, 2007 that media coverage of firms matters little to Canadian in-house lawyers.).

Sometimes, however, a prestigious reputation doesn’t carry the day (See my posts of May 4 and May 23, 2007 about general counsel not hiring firms just because of they are a household name; May 23, 2007 about a law firm’s prestige needing to penetrate the C-suite to benefit the firm; March 23, 2006 on pigments used in marketing; and May 26, 2007 that profits per partner don’t turn the head of general counsel.).

Law departments are at least partially to blame if law firms don’t deliver value for their fees

When a lawyer who retains a law firm knows the value of the work the lawyer wants, there should be few gaps between fees charged and fees paid. If the instructions are clear – “Do not spend more than $2,000 on this research/draft/review/deliberation,” how can the firm diverge very far?

Sometimes, therefore, criticisms about divergence between benefit delivered and fees paid reflects shoddy instructions to the firm (See my posts of Nov. 11, 2007 on this debate; and Feb. 4, 2007 on the difficulty of stating a dollar value for what a firm accomplishes.).

Further, the more your external counsel understand your business, the more likely they are to be in tune to how their costs and effort ought to stack up against your gains (or risks avoided). Again, the culprit when there is a mismatch between legal costs and value might be the in-house lawyer who failed to put the legal work expected to be done in a realistic business context.

Fair use of ideas in law firm proposals

When law firms submit proposals for work, they may suggest a management idea that has merit, but should your law department abscond with the idea if you don’t hire that firm (See my post of Oct. 1, 2005 about the ethics of disseminating good ideas in proposals.)?

Hard-nosers say, “Yes, absolutely, because the firms know that their ideas are not protected by some form of proprietary confidentiality. If they give you a good idea, it’s yours.” Those who disagree feel guilty that your law department takes without compensation, except the nebulous possibility that you think better of the firm and it might fare better in a later round of proposals.

The same ethical question arises when several law firms, competing to represent you, analyze a new law suit and suggest what strategies and legal arguments they might advocate. Good ideas are everywhere and once expressed can’t be taken back, but only one law firm will be selected.

I have to side with law departments on this one (surprise!). Part of competition is the risk that if you give good ideas or free services you still might not be selected, but if you don’t show your qualities, you are doomed. My belief – as exemplified by this blog – is that in the longer run, creative and go-the-extra-mile efforts pay off (See my post of July 19, 2007 on creativity as a grounds for choosing a firm.).

A years-of-experience benchmark for law departments

As a broad generalization, one law department that has more experienced attorneys than another department will probably be more productive. One might say that young lawyers bring energy and new perspectives, but I would put my money on those longer in tooth who have developed experiential judgment and who have accumulated a store of knowledge about the history, people and workings of their company.

But how can we quantify experience as between law departments? Add up all the years that the lawyers in a department have been out of law school. Then, count an extra year for each year those lawyers have been in that law department. Divide the total by the number of lawyers and you have a snapshot figure that is weighted toward experience with the company (See my post of Nov. 28, 2005 on the average age of lawyers in a set of law departments.). If a lawyer came in an acquisition, count them as if they had been with the company the whole time. The legal-tenure metric as proposed does not take into account any life experience of lawyers before they became lawyers. Perhaps the way to do that is to give them a half-year credit for each year before they became a lawyer on the assumption that at least they have more maturity.

I have never seen a benchmark like this compiled, but it would be an interesting metric to correlate against total legal spending as a percentage of revenue or against lawyers per billion dollars of revenue.

Four more tips for how to derail the email express rushing at you

A number of tips are discussed earlier on this blog (See my posts of Nov. 6, 2006 with three tips; June 16, 2006 and five tips; Dec. 28, 2006 with additional suggestions and comments; July 20, 2007 on Capital One and two tips; and Nov. 7, 2007 with five good practices.). But the hits just keep on rolling!

Law Technology News, July 2007 at 34, presents several good ideas from Tom Ranalli of Kirkland & Ellis.

1. Put your main point in the first paragraph, like a news journalist starts with the guts of the story.

2. Address separate topics in separate emails; don’t jam a group of unrelated topics into one message.

3. If the thread of a discussion changes, rename the subject line so that readers pick up on the new direction rather than the out-of-date topic.

4. Drop attachments that have already appeared, unless you add a recipient or the attachment needs to be available so readers can make sense of the message.

How many internal staff might an e-billing system require?

The question is, if you are a large law department and you have just installed e-billing, how many people might you require to support that software? Of course, the answer varies enormously, but let’s sketch one scenario for a law department of 20-to-50 lawyers.

After the initial setup period, an administrator might be required for something like one-half time to keep up with security, new users, password problems, training, help desk, system backup and other maintenance functions (See my post of May 2, 2007 on the term “full-time equivalent”).

Another half of a full-time equivalent might prepare reports from the system; analyze, chart and present those reports; and develop new insights.

A third person, let's call them a compliance person, might be needed to handle issues between law firms and the system (See my post of Nov. 28, 2007 on complaints of law firms about e-billing) or to harass lawyers to review bills on time, or generally to assure compliance with the system. That job might be on the order of half time.

Taken together, therefore, it would be possible to have a staff of one to two full-time people to support the e-billing software, assuming it is rolled out to most of the department’s firms. If those people cost the law department all in between $100,000 and $150,000, an accurate accounting of the return on investment of the software would net their costs against the savings that the software produces (See my post of Sept. 28, 2007 on the ROI of initiatives and references cited.).

Offshoring legal work to service providers in Israel

An article in Bus. Law Today, Vol. 17, Nov./Dec. 2007 at 61, differentiates offshoring to India from offshoring to Israel. The author, Ken Wollins of Green Point Legal Services, points out some disadvantages of Indian providers: promising what law departments want to hear because of cultural tendencies to avoid confrontation, a British style of speaking and writing, and capabilities more suited for simpler project-oriented assignments.

Not surprisingly, Wollins commends Israel with its "thousands of lawyers who have been raised and educated, admitted to the bar, and practiced law in the United States." According to him, "a general rule of thumb is that cost savings of about 30 to 40% can be achieved through Israel and about 50 to 60% in Asia."

The article concludes by saying that “even taking into account the aggressive forecasts, the total amount of legal work sent overseas will remain below 2 percent of [the $200 billion legal industry in the United States], and a considerable portion of that will be attributable to lower-skilled work that is not handled by lawyers."

Base annual base increases on demonstrated gains in productivity or expertise

I ruminated once about how law departments might grant hourly rate increases to law firm lawyers not simply because a year has passed but because the lawyers have gained some demonstrably increased ability (See my post of Nov. 13, 2006 on the rationale to grant requests for rate increases and discounts; and Nov. 21, 2005 on the need for law firms to show increased productivity.).

A law department might take the same approach for its own members. “Show me how you are better now than last year in meeting the needs of this department and company, and I will base your merit raise – if any – on that increase in productivity.” What would this do? My cynical answer is that it will push lawyers to manufacture ostensible improvements in their capacities (See my post of April 8, 2005 about dumb SMART goals and their distorting effect.). Managers who evaluate those supposed extra skills will be no better off.

Law departments shouldn’t reward lawyers for expanding their jobs or moving up the hierarchy (aka promotions), but for increasing their skills, adding to their expertise, and managing their groups more effectively. That aspiration is easier to say than to do.

A work-in-process definition for law departments of “management tools”

In the context of law department management, it has become frustrating for me to define the term “management tools” (See my posts of April 17, 2007 on tools; and April 14, 2005 on 18 tools and a definition.). Tools help managers and others gather facts, organize those facts, diagnose the situation in light of those facts, or communicate any of this. In my conception, tools have four characteristics (See my posts of May 14, 2005 and Nov. 20, 2007 on the management-tools survey of Bain.), but I am not yet comfortable with these distinctions.

1. Tools must be teachable, which excludes many innate or personal attributes. Intelligence is not a tool (See my post of Jan. 15, 2006 on how to increase IQ; and Nov. 7, 2007 about the Flynn effect of rising IQs.) nor is much of humor or creativity. A process map, I would claim, is a teachable tool as is a meeting agenda. People prepare guidelines for how and when to use tools, and there are courses and books about the proper use of the tool, such as the cornucopia of techniques under TQM.

2. Tools must be in writing or physical. Tools must be tangible so you can look at them; thus interviewing is not a tool as much as a skill, nor are benchmarking, focus groups, or change management as they are complex groups of activities that lead to what can be put into a tool. A survey is thus a tool as is a protractor.

3. Tools must be generic, in the sense that the tool can apply to a wide range of management challenges. A spreadsheet is a classic tool in this sense as are statistical methods.

4. Tools must be atomistic, distinct, and not decomposable into a more fundamental tool. Thus, convergence isn’t a single tool but more a set of ideas. The same for schools of tools like Six Sigma, TQM, change management, and negotiation. But a budget is a budget.

The seven ways work arrives for an in-house lawyer

A lawyer’s in box -- what a quaint phrase -- gets filled in a variety of different ways. But what exactly is the allocation of work by source? Not being burdened or confused by any empirical data on the sources of legal work for in-house counsel, I will proceed resolutely to propound before your very eyes the ultimate list, adorned with irrefutable, iron-clad percentages, and all in declining order.

The largest portion of many lawyers’ time is for work that they take on independently, because it has to be done and they recognize that, such as litigation or securities filings (31.6 % of all time worked by in-house lawyers).

In the age of ubiquitous telecommunications, email triggers substantial legal work; its cousins, like the Blackberry, are rising on the frequency charts. Together they account for a total of 25.4 percent of a typical 10th year attorney’s time.

Quite often the telephone rings, and that starts the lawyer off on a project. Calls generate 21.2 percent of hours worked on corporate legal matters.

Quite commonly, during a meeting, a lawyer takes on a new task. This source accounts for 19 percent of work hours.

The third category is work assigned by another lawyer, which varies widely by the size of the department and its structure. Nevertheless, the unarguable percentage is precisely 15.8.
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Rarely does a client drop in on our archetypal lawyer to start a project (5%).

Every now and then an inter-office envelope arrives with material to be reviewed (0.5 percent).

Note that the percentages do not add to 100, because they are totally fictitious – but they might be directionally correct.