The general counsel of Ford Motor, David Leitch spoke recently to a group and his remarks are published in the Nat'l L.J., Vol. 30, Jan. 28, 2008. Leitch mentions that Ford Motor has about 13,000 cases pending against it. Up those cases probably 10,000 are asbestos-related and are not particularly active (See my posts of Oct. 25, 2007: the percentage of dormant cases; April 17, 2007: percentage of dormancy months; and Aug. 22, 2006: a metric of law firm performance.). “Another 2000 2500 at any given point in time are product liability cases." The point has been made before that a law department’s absolute number of cases pending may be a poor indicator of workload (See my post of Aug. 22, 2006: number of lawsuits pending.).

One unusual aspect of Ford's litigation program is that its in-house attorneys try a lot of cases. "[W]e tend to try 80 to 100 product liability cases in a year, as well as a handful of employment and other types of cases” says Leitch. He proudly reports that Ford wins about 80 percent of the cases than it takes through trial (See my post of Feb. 23, 2008: Affymetrix does its own offensive litigation; Feb. 9, 2008: don’t “manage” litigation, handle it.). Its volume of cases allows Ford to selectively represent itself on many of them.

Since my last collection of posts that pull together related entries – “embedded metaposts” I call them – I have added 10 more (See my post of Feb. 16, 2008: Part IV.). Here they are, with links.

Administrators (See my post of Feb.13, 2008.)

Balanced scorecards (See my post of Feb. 26, 2008.)

Correlations (See my post of Feb.13, 2008.)

Dictation (See my post of Feb. 23, 2008)

Document assembly (See my post of Feb. 26, 2008.)

Early case assessment (See my post of Feb. 23, 2008.)

Law-firm networks (See my post of Feb. 21, 2008.)

Practice-area benchmarks (See my post of Feb. 25, 2008.)

Retreats and offsites (See my post of Feb. 12, 2008.)

Six Sigma (See my post of Feb. 13, 2008.)

Paul Roy, Director of Finance & Administration of Time Warner Cable’s Law Department, allocates to 20+ divisions and regional offices outside-counsel costs incurred by the Department on their behalf. His department charges back approximately 60 percent of its outside costs in a typical year. The rest is absorbed in the Department’s budget as a corporate cost. Lots of matters are deemed corporate, like class action litigation, regulatory demands of a cable company, securities, benefits plans, and legacy litigation.

InsideCounsel, Jan. 2008 at 50, notes from an Altman Weil survey “62.5% of legal departments charge back outside counsel costs to operating units.” This is not to say that 100 percent of outside counsel costs are charged back by the law departments in that survey; like Time Warner Cable, most legal departments absorb a fair amount of spend (See my posts of Oct. 15, 2007 on a client gatekeeper for external expenses; May 31, 2006 on charge backs; Nov. 10, 2007 about a three-way approval process.).

Roy tries to give the divisions estimates of amounts to be charged them but it is difficult to do because costs are hard to predict when you become granular – the total legal budget of the Department is easier to predict. There are some discussion about which costs should be assigned to which bucket – a business unit or the law department, as business units don’t want to absorb costs and so they argue for them to be paid as a corporate expense. Sometimes the outcome is to split costs.

Roy’s department does not charge back staff units; fees paid firms on behalf of IT, HR, and marketing are kept in the legal budget. The rationale: those costs are corporate. But there is some allocation to business units of corporate overhead, which includes a portion of the legal fees paid.

Law department managers who use temporary or contract attorneys may find that one of the lawyers does great work, fits right in, wants to join the department – and there is an open position. If the law department hires the lawyer, the department may owe the temp agency an extra fee. Paul Roy, Director of Finance & Administration of Time Warner Cable’s Law Department, points out that usually the temp agency carefully provides in its contract for a large charge for those who snatch away their talent. The agencies sometimes refer to this fee as the “conversion rate.”

Typically the conversion rate is a sliding scale, with lower payments the longer the person has stayed with the law department. For example, according to Roy, at the start you see conversion-rate charges of 20-25 percent of the person’s first-year compensation, then maybe 10 percent after three months (See my posts of Sept. 21, 2005: secondments and non-hire agreements; Dec. 17, 2007: temporary and contract lawyers; July 14, 2005: temporary staffing arrangements; and Nov. 26, 2006: contract lawyers and references cited.). In other words, the cost of a temp-to-full-time conversion amounts to roughly the same as the placement fee executive search firms charge (See my posts of Jan. 10, 2006: some cost comparisons on temporary staff; April 9, 2006: contract staff versus temporary staff; and Aug. 2, 2006: Sears’ experience.).

Law department managers who use temporary or contract attorneys may find that one of the lawyers does great work, fits right in, wants to join the department – and there is an open position. If the law department hires the lawyer, the department may owe the temp agency an extra fee. Paul Roy, Director of Finance & Administration of Time Warner Cable’s Law Department, points out that usually the temp agency carefully provides in its contract for a large charge for those who snatch away their talent. The agencies sometimes refer to this fee as the “conversion rate.”

Typically the conversion rate is a sliding scale, with lower payments the longer the person has stayed with the law department. For example, according to Roy, at the start you see conversion-rate charges of 20-25 percent of the person’s first-year compensation, then maybe 10 percent after three months (See my posts of Sept. 21, 2005: secondments and non-hire agreements; Dec. 17, 2007: temporary and contract lawyers; July 14, 2005: temporary staffing arrangements; and Nov. 26, 2006: contract lawyers and references cited.). In other words, the cost of a temp-to-full-time conversion amounts to roughly the same as the placement fee executive search firms charge (See my posts of Jan. 10, 2006: some cost comparisons on temporary staff; April 9, 2006: contract staff versus temporary staff; and Aug. 2, 2006: Sears’ experience.).

I would like to troll software tools that tell me about who is reading what on Law Department Management. During the past year I have shared what I have learned about the plumbing of this blawg (See my posts of Feb. 16, 2008: top referring domains; Feb. 24, 2008: information architecture; and Feb. 25, 2008: thoughts on this blog’s third anniversary.) and will continue to do so. Perhaps readers will point me in the direction of other tools.

My hope is to react more often to material posted on other blogs (See my post of Feb. 20, 2008: law-department related blogs.). I try to link to other blogs but find it hard to locate eligible material. Some people who blog rely heavily on quick cites to other sources: “For an update on salaries and jobs in-house, visit InHouse Blog of Geoff Gussis.” Other bloggers pick up an idea from a source and riff on it, briefly or extensively, as they add their own perspective. All the reading I do provides me with an endless stream of ideas to blog on (See my post of Nov. 13, 2007: my leading sources.). A third style of blogging means you write from scratch, and creates original material. I do a fair amount of the latter, based on my consulting projects.

What I wish I could unleash is collaborative filtering: readers would link posts to other posts or, like Amazon, I could show that if someone reads a given post they are likely to read another post. Every now and then I ask vendors of concept search software whether they can help on that front. It would also be neat if there were a way for readers to rate posts and for me to know how many times a given post is emailed to someone.

Finally, it would be illuminating if each post about a specific law department could include the size of the department, its industry, and a date range for the practice under discussion. Those explicit facts or metadata would enable searches by size of department, by industry and by period.

A tool that some general counsel use to keep track of their key metrics is the balanced scorecard. A few posts on this weblog have poked and sniffed at balanced scorecards. Several law departments that actually user balanced scorecards are on display (See my posts of March 8, 2006: a balanced scorecard at Northwestern Mutual; Aug. 27, 2005: a British law firm’s scorecard; and Aug. 24, 2006: UTC’s law department scorecard.).

Other posts have broadened the discussion (See my posts of Aug. 4, 2006: dashboards compared to scorecards; Jan. 23, 2008: two-way balanced scorecard between firm and department; Dec. 9, 2005: data visualization software; and July 25, 2005: how to best embed metrics in reality.) while one recommends how to prepare a balanced scorecard (See my post of Nov. 8, 2007: how to prepare a balanced scorecard for legal.).

Risks exist for law firms who take on matters on a contingency-fee basis. As graphically described in Inside Counsel, Feb. 2008 at 16, if a client chooses down the road not to pursue what would make its law firm eligible for its contingency fee, tough luck for the law firm. For example, if a company agreed to pay a bonus for a victory at trial, the law firm receives nothing if the company settles the case before the trial concludes.

Because of this eventuality, both the firm and the department need to envision performance rewards that will make sense no matter what happens. That foresight takes time (See my post of Nov. 6, 2007: alternative fees take time.) but you want neither dashed expectations nor fee arrangements driving strategy (See my post of Sept. 28, 2007: be wary of incentives.).

At LegalTech NY this year, Exari handed out case studies about two law departments. Dow Jones’ legal team can “deliver tailored, self-service contracts to its global sales force” as a self-service option for subscription agreements. Westpac, an Australian financial services company, uses Exari software to generate 80 percent of the suite of customer documents for its commercial equipment loans, all in one-tenth the time.

I have doubted the penetration of document assembly into law departments (See my posts of March 24, 2005: if-then, rule-based document assembly software; and Jan. 28, 2007: some history on the field.) but the software niche has plenty of offerings (See my posts of April 5, 2007: 10 applications listed; and April 16, 2007: five more applications.).

Several law departments who use document assembly and their service providers have been cited (See my posts of June 18, 2007: two references cited; Aug. 31, 2005: Schering-Plough Canada; Jan. 16, 2006: McDonalds; Feb. 6, 2007: Business Integrity users; Jan. 4, 2006: Microsoft; and Jan. 14, 2007: General Electric.).

Some law firms have assisted clients by developing contract preparation software (See my post of April 8, 2007: law firms help law departments develop rule-based drafting systems.) and there are available a number of consultants (See my posts of Feb. 24, 2007 on consultants; April 16, 2007: two more consultants; and Oct. 31, 2007: Eric Little.).

The Exari software falls into the broader category of enterprise contract creation and management (See my posts of May 5, 2006: contract administrators; and Dec. 17, 2007: clause libraries.). The company’s patented software offers law departments more than automated contract assembly. It also manages the contract’s life cycle, enables better searching and storage of contracts, and permits users to run analytical reports.

This stunning estimate comes from eLawForum; even more dramatic, the article notes that $210 billion is one-third of the after-tax profits of the Fortune 500. The article in Met. Corp. Counsel, Vol. 16, Feb. 2008 at 28, explains that the estimate includes defense costs – certainly outside counsel but possibly also the costs of inside counsel and clients – as well as liability costs – settlements and judgments. The data set includes total litigation costs for more than 20,000 cases in twenty practice areas so the $210 billion figure must be an extrapolation.

What the right number is has not been decided. Others have estimated the size of the legal industry in the United States, pronouncing figures such as $200 billion (See my post of Nov. 27, 2007; but see my post of Jan. 18, 2008 and its rationale for $200 billion on outside counsel from only the Fortune 500.). According to the Economist, Dec. 17, 2005 at 57, “about $250 billion is spent on legal services world-wide, about two-thirds of it in America.” That means about $165 billion in the US for all legal services, but query whether that estimate includes the costs of inside lawyers (See my post of Jan. 10, 2006: the citation.).

Other estimates of the costs of US litigation vary widely (See my posts of July 16, 2005: “of the $260 billion spent in 1999 on litigation, over $20 billion was spent on support services that include processing, delivering and filing legal documents.”; April 27, 2006: plaintiff contingency lawyers estimated to receive upwards of $22 billion in 2003.).