Law Department Management: October 2008

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Neural nets and the logic to estimate the costs of related matters

At some point we will be able to analyze data on a moderate numbers off cases and predict the costs of similar cases. An inspiration for this forecast is a computer system that predicts which death-row inmates are most likely to be executed, as described in Scientific Am., Vol. 299, Sept. 2008 at 36. Software analyzed data on about 1,000 death-row prisoners, including their sex, age, race, schooling and whether they were ultimately executed. When given similar information about 300 more prisoners, the logic developed from the first set of data correctly predicted the outcome for 92 percent of those cases.

Someday, when a group of law departments contribute sufficient data on certain matters, someone will use similar software to predict the likely cost of such matters (See my post

pril 7, 2006

analytic software for invoices; and

005

on artificial intelligence software.). It will take 20-30 legal departments who each contribute relevant data on 20 to 30 matters – such as recently concluded employment discrimination or patent suits, to reach a comparable level of insight (See my post of Sept. 22, 2006: entrepreneurial ideas on this blog.).

Posted by Rees Morrison on October 29, 2008 in Tools | Comments (0) | Permalink

Blogs that have referred readers to LawDepartmentManagementblog.com This blog comes to the attention of online searchers in a variety of ways. One way is that other blawgs cite to posts here. I have been collecting some of the unusual referral sites from the last few days and mention a number of them below. Thanks, all of you! A blog on in-house jobs, and much more (InHouseBlog) A blog on settlement techniques (Settlement Perspectives). An online platform that lets a user who stumbles upon something useful share that discovery with friends (Stumble Upon). A blog that looks at legal affairs with a sense of humor (WiseAcre Blawg) A blog from a maritime lawyer who enjoys writing (Where’s Travis McGee?)

Posted by Rees Morrison on October 25, 2008 in Thoughts/Observations | Comments (0) | Permalink

Steps that help people act on a good idea Perhaps a reader can tell me the originator of the metrics below. Regardless of their source, these observations and percentages ring true. Managers of law departments would do better if they followed the advice suggested. • 10 percent of people who hear a good idea will do something about it • 25 percent will do something with it if they think hard about it • 40 percent will do something with it if they prepare a plan • 50 percent will do something with it if they add times to the plan • 60 percent will do something with it if another person is asked to be involved • 90 percent will do something with it if there is a date set to follow up with the other person

Posted by Rees Morrison on October 24, 2008 in Productivity | Comments (0) | Permalink

Bias in support of our conclusions, and a mental exercise to test that bias Leonard Mlodinow, The Drunkard’s Walk: How Randomness Rules Our Lives (Pantheon Books 2008) at 191, urges that ”We should learn to spend as much time looking for evidence that we are wrong as we spend searching for reasons we are correct” (See my post of July 10, 2007: the confirmation bias.). Most of us not only rush to judgment but fasten ourselves like pit-bulls to the judgment we quickly reached. A simple corrective, though hard to push ourselves to do, is to try to disprove our conclusion. Deliberately look for data or opinions that challenge your conclusion and honestly assess them. The same approach helps unfreeze our frozen ways of thinking about management. The McKinsey Quarterly, 2008 No. 1 at 31, offers good advice from Gary Hamel for general counsel. “To become inspired management innovators, today’s executives must learn how to think explicitly about the management orthodoxies that bound their thinking – the habits, dogmas, and conceits they’ve never taken the trouble to challenge.”

Posted by Rees Morrison on October 24, 2008 in Thinking | Comments (0) | Permalink

Offerings by law firms beyond legal capabilities I have written from time to time about the capabilities of law firms that complement their lawyers’ abilities (See my post of Oct. 21, 2005: Faegre & Benson litigation support group; Oct. 17, 2005: a few British firms’ on-line offerings; and Nov. 18, 2007: 7 examples of services offered by law firms.). A striking example of a strong offering comes from the ABA J., Vol. 94, Oct. 2008 at 57. The US litigation firm, Shook, Hardy & Bacon, has an in-firm team of research analysts and para-professionals to support its attorneys. “That team – which includes more than 100 experts with advanced degrees in biochemistry, neuroscience, electrical engineering, toxicology and other fields – helps create trial exhibits, prepare witnesses, formulate discovery and trial theories, and evaluate complex scientific and technical issues.” A law department could like that expertise!

Posted by Rees Morrison on October 24, 2008 in Outside Counsel | Comments (0) | Permalink

Early history about the management practice, regional counsel What inspired general counsel first insisted on a budget from a law firm? Who first received an invoice electronically? When did the first law department appoint an official administrator? I do not know these milestone dates and specifics, but I wish I did. I have managed to dig up a few historical points (See my post of Dec. 31, 2006: pre-1900 references in the NY Times to law departments; Dec. 31, 2006: historical information on law departments; Feb. 19, 2006: eras of law department management; Feb. 23, 2006: books, including one from 1907 on a law department; July 18, 2006: Sears’ law department formed in 1946; April 8, 2007: first university IP department; and March 1, 2008: another book on the NY City Law Department.). Because no historical narrative traces the roots of law-department management practices, I was interested to read that in 1962, Shook, Hardy & Bacon was retained by Eli Lilly, and “went on to become Lilly’s regional counsel – a new concept at the time.” Aha, a glimmer of history regarding one piece of law department management. The quote comes from the ABA J., Vol. 94, Oct. 2008 at 55.

Posted by Rees Morrison on October 24, 2008 in Outside Counsel | Comments (0) | Permalink

An analogy between corporate finance and legal talent According to the “indifference theory” of economics, in a perfect market the value of a company is independent of its capital structure, which is its mix of equity and debt financing. Having read about this in the Harv. Bus. Rev., Vol. 85, Sept. 2008 at 94-95, I wondered whether the effectiveness of a company's legal risk management function (aka law department) is independent of its talent structure, its mix of inside and outside lawyers. Perhaps we can think of the fixed cost of internal lawyers as debt -- a company has a contractual obligation to pay its dividend (salaries and bonuses). The outside lawyers it hires are equity, varying in value (expense) according to how and how much that variable expense is used. Benchmark metrics suggest that the ratio of a typical law department's spending on inside counsel and outside counsel tracks the differential in cost per hour between the two sources of legal talent (See my post of Dec. 5, 2007: 60/40 ratio of outside-to-inside spending.). Perhaps that is the normal ratio for talent of debt to equity.

Posted by Rees Morrison on October 24, 2008 in Talent | Comments (0) | Permalink

Six Sigma and a project for entity oversight A Six Sigma project at a manufacturing firm tackled the chaotic situation of too many corporate entities where too little was readily known about them. The project concluded that the lawyers needed to gather information on all the company’s Asian-Pacific entities. They created a database and prepared an ownership chart. The database stores all the charter documents of the entities, lists the directors and officers, and includes some other information that is relevant to corporate governance and corporate secretarial responsibilities. The database is online for everyone in the region to access and has tabs for the categories of documents (See my post of Feb. 13, 2008: Six Sigma with 18 references.)

Posted by Rees Morrison on October 24, 2008 in Tools | Comments (0) | Permalink

Six years out of the law department, then promoted to General Counsel

Some general counsel wander in the wilderness, sometimes for several years, before they become the top lawyer. Sandy McDade, for example, practiced for 20 years in Weyerhaeuser’s law department. He then left the department and spent six years in a strategic planning role and as the leader of the company’s Canadian subsidiary. At that point he rejoined the law department, but as the general counsel.

The tale of this unusual path comes from InsideCounsel, Oct. 2008 at 90. James Lipscomb, the current general counsel of Metropolitan Life also spent several years in business roles before assuming the top legal position. Other chief legal officers have gained experience outside the law department See my post of Aug. 3, 2005: career of Rosemary Berkery; and Nov. 6, 2005: GC of the Bank of Australia ran its strategy group.).

Posted by Rees Morrison on October 22, 2008 in Talent | Comments (0) | Permalink

Cost-benefit analysis sheds light on the difficulty of ROI calculations

Cost-benefit analysis (CBA) resembles some decisions about non-hourly fee arrangements in that both are efforts to match what is paid against the value of what is gained.

A thoughtful article in the Bus. Lawyer, Vol. 63, Aug. 2008 at 1187, analyses closing opinions of counsel in terms of standard CBA methodology and assumptions. Among many points, the author emphasizes the difficulties of deciding before legal services are provided what should be paid for them. “[I]n certain important respects we may not know the benefits of a closing opinion without incurring the costs” (at 1190). Likewise, law departments often cannot put a financial value on legal work without first incurring the costs of that work.

Cost-benefit analysis could help with some of the decisions general counsel make about the return on investment (ROI) of various management initiatives (See my post of May 1, 2005: bill review software; May 14, 2005: knowledge management; Sept. 21, 2005: Cisco’s discovery lab; Nov. 19, 2005: Google’s law department; May 4, 2007: Holcim’s law department; May 14, 2005: knowledge management; June 16, 2006: various management actions; Aug. 16, 2006: portals; Dec. 9, 2006: electronic repositories of law-firm work product; Feb. 17, 2007: products and services; Jan. 14, 2007 GE’s claims; Oct. 8, 2007: knowledge management initiatives; Dec. 11, 2007: DuPont’s EDGE system

I have expressed my doubts about calculations of ROI (See my post of Sept. 28, 2007: criticism of ROI; March 12, 2006: nominal ROI calculations; July 31, 2005: implausible ROI calculations; and June 18, 2007: impossibility of calculating ROI for knowledge management.). CBA analysis offers some new approaches to thinking about ROI.

Posted by Rees Morrison on October 22, 2008 in Tools | Comments (0) | Permalink

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