In some consulting projects I have spoken with partners at the primary firms of my client law department. The hope has been that they will identify aspects of the law department that can improve. Usually, however, what the partners say disappoints me, because they never take the gloves off.

As I scanned the encomium for GE’s law department by a group of eight partners who represent GE, published in Met. Corp. Counsel, Vol. 16, Aug. 2008 at 36, I gagged. A partner at Munger Tolles confides that GE’s in-house lawyers “are the most consistently excellent in-house lawyers I have encountered in my career.” An M&A partner at Allen & Overy burbles that “working with GE lawyers is like having additional partners on your side.” Weil Gotshal’s partner praised them fulsomely: “You are working with people who know what they’re doing; are very professional and very smart.” Not to be outdone, a King & Spaulding partner who has represented GE for thirty years laid it on thickly: “Every GE lawyer I’ve met is a class act. They are excellent managers of outside counsel.” From the standpoint of Paul Hastings, “they are not only tough, smart and dedicated, but they also challenge us in ways that make us all better lawyers.”

How do lawyers at the other firms these partners represent feel? Do they speak as highly of their own partners and associates (See my post of March 30, 2006: do partners fake praise of in-house counsel; and Oct. 30, 2006: patronizing attitude of law firm partners.)?

A profile of Kellye Walker, North American general counsel of beverage-giant Diageo, in Legal Times, Vol. 30, Aug. 20, 2007, mentions that entire law department held its legal conference in Shanghai. Diageo’s legal department totals approximately 80 lawyers.

The cost of that gathering, which I presume to have been for at least two days, had to have been huge. My point is not at all to criticize Diageo, because I strongly support bringing lawyers together to meet each other and to share information (See my post of Feb. 12, 2008: retreats and conferences with 8 references.). That objective becomes even more important for wide-spread departments.

Rather, I point out the obvious: costs mount. Might 70-some lawyers flying to China average $5,000 per ticket ($350,000)? Might three nights in a Western hotel in Shanghai exceed $1,000 per person ($70,000)? Might the fully-loaded cost of these lawyers be around $200 an hour, so the opportunity cost was on the order of eight hours a day times four days – assuming the conference ran two days and travel days are included ($512,100)? Might incidentals add at least another $500 per lawyer ($40,000) (See my post of April 17, 2006: schwag, trinkets and give-aways at retreats.). Takes your breath away to think that pulling together a global legal team of 80 lawyers might run up a tab of a million dollars!

Frank Furedi, Where Have All the Intellectuals Gone: Confronting 21st Century Philistinism (Continuum 2004) at 38-41, discusses the differences between professionals and intellectuals. “The mental work of the professional is focused on the provision of services, not the promotion of ideas.” Ideas become instrumental, means to a solution, rather than values in their own rights.

Furedi writes that “Activities such as offering a critique of the status quo, acting as the conscience of society, or pursuing the truth regardless of the consequences are not what the job of a professional is all about.” Intellectuals embrace autonomy, divergent thinking, and the development of ideas as an ultimate value. Professionals don’t rock the boat, don’t stray outside accepted roles, strive to keep themselves marketable, and do what they can to fit into commerce. More managerial or technocratic, the professional lawyer is not an intellectual.

Struggling through another benchmarking project that requires persuading general counsel to release a paltry few metrics, I turned empathic. Why is it so difficult for consultants to collect benchmark metrics from other law departments on behalf of a client (See my post of Oct. 17, 2005 that urges general counsel to take part in surveys.).? Here are the objections that I suspect would be voiced, in declining order of frequency.

1. General counsel believe that the people who would need to research the figures and complete the benchmark survey have better uses of their time.

2. General counsel do not want to disclose to anyone certain tightly-held confidential figures, such as on staffing and spending, because competitors in the industry will use them to their advantage (See my post of April 15, 2007: proprietary information of law departments.).

3. The companies in the survey “are apples to our oranges” so any findings are suspect.

4. Data that would be provided, mostly on spending, is anomalous for this year, “because of the spike in spending on the XYZ case.”

5. Senior lawyers mistrust statistics in management. “All that math stuff is hokum!”

6. Too many surveys flood in for the general counsel to want to pick and choose among them – “We don’t do any surveys” becomes the easier policy.

7. The general counsel worries that the figures will expose how poorly he or she manages the department.

8. General counsel don’t believe the figures other companies provide are honest.

9. The company as a whole has banned participation in surveys.

10. Once you acknowledge that metrics may have meaning, you demystify the exalted Oz-world of the legal department and it plummets into the bean-counting hell of Taylorism.

Listening to John Lennon, my mind took a perverse turn and wondered what if general counsel in the US suddenly, all over, transformed themselves into wonderful managers.

Fewer in-house counsel, I imagined, because they would be much more productive, insightful, and attuned to their clients’ needs. On the other hand, with such talent and output, companies might crave more lawyers, not fewer.

Lower total legal spending as a percentage of revenue (TLS/Rev), I imagined, because the enlightened legal departments would avoid legal risk, resolve disputes efficiently, and squeeze more beneficial services at a high level from their budgets. On the other hand, finely-tuned experts might spot more issues and pursue more forms of legal services, so spending would rise.

Less use of outside counsel, I imagined, because the well-managed legal team would be more knowledgeable, hard-working and eager to take on the tough projects. On the other hand, general counsel would be better at sticking with core competencies and how to negotiate tough but fair terms with external firms.

Happier clients, I imagined, because the in-house legal team would understand their needs and competently meet them. But, it might also mean that law departments would stand up and resist work they shouldn’t do, introduce more legal issues into transactions, assert their independence and, in short, undo the good will that one would imagine from an improved legal function.

My point: unintended consequences bedevil every imagined change (See my post of Aug. 28, 2005: trade offs when actions are taken; Aug. 1, 2006: second-order consequences; Dec. 17, 2006: all practices have pros and cons; and July 10, 2007: well-intentioned actions that boomerang.).

Cartoons are sometimes no laughing matter, and one in the LA Times, Aug. 28, 2008 at C2, hurt. Scott Adams www.dilbert.com shows in panel one of Dilbert the hapless guy with the flat head and tie flipping up speaking to “company lawyer,” a bespeckled nerd, with no computer on his desk, in an oversized chair.

“Can you turn a simple agreement into impenetrable gibberish?” asks the anti-hero.

The in-house lawyer graciously accepts the assignment in panel two: “Absolutely. I can also leave a sour taste in everyone’s mouth and make you want to choke me with my suspenders.”

Panel three closes this sad scene, one that skewers all the important smears against legal departments. The “company lawyer” adds: “If you exercise and eat right, you might still be alive when I finish it.” Anti-hero mumbles, “Good enough.”

The strip is masochistically funny, but it perpetuates the stereotype that in-house counsel over-lawyer documents and mire them in legal jargon, behave boorishly, and take forever to ruin the whole thing.

Please make use of ten more embedded metaposts with URL links (See my post of Aug. 21, 2008: Part XVI.) along with the number of posts or other references cited within them.

1. Compensation by level in the department (See my post of Aug. 27, 2008: compensation by levels with 18 references.)
2. Delegation within the law department (See my post of Aug. 28, 2008: delegation within a law department with 14 references.)
3. Fully-loaded cost per lawyer hour (See my post of Aug. 27, 2008: fully-loaded cost per lawyer hour with 31 references.)
4. Hold orders in litigation (See my post of Aug. 27, 2008: litigation hold notices with 6 references.)
5. K&L Gates references (See my post of Aug. 28, 2008: material from “top of the mind” with 10 references.)
6. Partnering (See my post of Aug. 27, 2008: partnering between law firms and law departments, with 14 references.)
7. Pro bono (See my post of Aug. 24, 2008: pro bono programs of law departments with 12 references.)
8. Risk averse aversion (See my post of Aug. 24, 2008: lawyers and risk averse behavior with 11 references.)
9. Rotation (See my post of Aug. 28, 2008: rotations for lawyers with 7 references.)
10. Work product (See my post of Aug. 28, 2008: work product with 10 references.)

For all kinds of reasons, the gold standard of law department metrics – total legal spending as a percentage of revenue (TLS/Rev) -- varies significantly by industry. If you have enough companies in each industry so that you have a reliable median figure for TLS/Rev in each industry, the figure can range from 0.7 percent of revenue at the high end for technology and financial services to 0.2 percent at the low end for commodity manufacturers (See my post of Dec. 19, 2007: squishiness of any “industry” label.).

To say that general counsel in lower-TLS/Rev industries manage their company’s legal costs better than counterparts in highly regulated, patent intensive, higher-TLS/Rev industry is wrong. Each general counsel faces a different set of industry-related cost drivers.

The way to compare benchmark performance across industries is to calculate the industry median and then match each company’s performance within the industry against that median. A law department that is 25 percent higher than median can be thought of as equivalent – in terms of management against TLS/Rev – as another department in a completely different industry where that law department is also 25 percent higher than its industry median (See my post of Nov. 30, 2005: the meaning of the statistical term, “median”.).

An investigation of the relationship between hedge fund returns and the academic credentials of their managers’ colleges nudged me to muse about a related study for law departments. As reported by the NY Times Mark Hulbert a few months ago, academics compared the performance of about a 1,000 of hedge funds in light of the average SAT score of the college attended by the fund’s lead manager. The study found “a strong positive relation” between a hedge fund’s performance and the average SAT score at its manager’s school, even on a risk-adjusted basis.

What if someone collected data on total legal spending as a percentage of industry (TLS/Rev) and normalized it by industry (See my post of Aug. 28, 2008: how to correct TLS/Rev across industries.). That person could then blend in the average LSAT score of the law schools attended by the general counsel of those departments and see whether there is any correlation to TLS/Rev (See my post of Nov. 14, 2005: LSAT scores have been on the decline.). My hunch is that general counsel who graduated more exclusive law schools will turn in better performances.

The article speculates that “managers who attended more-elite institutions had better contacts in the business and investment areas,” but thought better networking was a minor contributor to the delta in fund earnings. No, the dominant reason, concluded the researchers, is “the superior talents and higher intelligence levels of the average student at the higher-SAT institutions.” Brains will out.

Cisco “recently completed a takeover in eight days (as opposed to the usual weeks or months) by putting lawyers in telepresence rooms instead of on aeroplanes.” Telepresence rooms, the Economist, Aug. 25, 2007 at 57, explains, enable attendees to feel hugely closer to attendees in the distant room than does old-school teleconference equipment.

I paraphrase from the article: People in telepresence meetings appear life-sized, and the tables and rooms at the two ends blend seamlessly because furniture and wallpaper are often identical. You feel like you are in the same room and can make direct eye contact with the other attendees, a feature which requires multiple cameras and enormous computing power. Delays in sight and sound are so short that the human brain does not notice them, so people can interrupt each other as if they were sitting across the table. When people speak, the sound comes from their direction. Yet, with all this immense sophistication, telepresences are simpler to get started than notoriously fickle and multi-step teleconferences.

Naturally, the rooms cost a pretty penny – more like several hundred thousands of dollars a room. Still, the article appeared a year ago and prices have probably dropped. Lawyers in-house will be able to benefit from this step-jump in communications technology.