On a panel summarized in the ACC Docket, Jan./Feb. 2010 at 91, the always thoughtful Sabine Chalmers, chief legal officer of Anheuser-InBev, spoke admiringly of a “law firm that came to her with an analysis of a previous deal, explaining 10 ways they could be more efficient with similar deals in the future.”

A general counsel might invite a few firms to critique a recent deal, in part to learn ways to handle the next one better and in part to let firms strut their stuff about creativity, knowledge of the legal service area, etc. It would be something like creating a case study for an MBA course. You put in enough details to make the problem credible and then let the firms analyze it and put forward improvements (See my post of May 27, 2008: post mortems with 7 references.).

Martine Turcotte, Chief Legal & Regulatory Officer of BCE, Inc., lobbed out a provocative idea at a recent panel. In the words of the ACC Docket, Jan./Feb. 2010 at 91, she “mentioned an interest in exploring the pooling of resources with other companies to get lower rates based on volume.”

If my leasing work combined with your leasing work gives us a sufficient spend to get better service and deeper discounts from a firm, why not negotiate jointly with it? Some British agencies already share pricing information (See my post of Jan. 21, 2010: UK government legal departments collect fee data from firms.).

To be sure, the negotiation would be fraught with lawyerly issues and concerns. Ideally the firm already represents both (or all) the clients. The kernel of this idea makes sense to explore.

Brad Smith, Microsoft’s general counsel, made some comments on a panel reported in the ACC Docket, Jan./Feb. 2010 at 89-90. He said his budget had been reduced by 10 percent. Given some figures previously published, he may have taken a haircut of something like $40-60 million (See my post of June 30, 2009: Microsoft’s management initiatives with 30 references.).

Later, Smith said that he “anticipates that 45 percent of Microsoft’s legal bills will be on an alternative fee basis, up from 31 percent two years ago.” At seven percent a year, the shift amounted to more than ten million dollars a year (based on an estimated 450 lawyers and a typical benchmark figure of $600,000 in outside costs per lawyer).

In an article from HR Mag., Feb. 2010 at 52, on employee engagement, the author mentions that Zappos.com sends around detailed surveys twice a year. The company also relies on “monthly, five question pulse surveys that ask employees to respond to broader statements such as ‘I feel like I’m making progress in my career.’”

Does any general counsel take the pulse of their law department with similar spot surveys? I have never heard of one (See my post of July 13, 2008: employee morale with 15 references.).

When coalescing its group of outside counsel into a smaller number of primary firms or selecting a firm for a multi-year commitment, a law department rightfully wants to select firms that are financially solid, that will prosper during the term of the agreement. That desire prompts questions in the Request for Proposal about firms’ financial and management strength. But are there limits to the breadth and depth of those questions?

Say you believe that retention figures tell something about how stable a firm is, so you ask for data on partner departures in the past two years. But why not go back five years? And what about associates? Or you believe a firm that grows by bolt-on acquisitions is riskier as a long-term bet than a firm that shows steady organic growth. Is it fair to ask about all mergers (and how do you define a merger) and for how many years back? Is the capitalization of the firm a legitimate inquiry? What about unfunded pension obligations? Can you ask the number of clients that account in total for 30 percent of the firm’s revenue in the past year? Their names?

Just listing the range of possible questions makes the point: legal departments have a right to assure themselves that a firm will remain able to serve it, but there is a blurry line over which questions step too far.

HR Mag., Feb. 2010 at 31, provides definitions of the two kinds of workers: Contract workers are “workers employed by a company that provides them or their services to others under contract. They are usually assigned to only one customer and usually work at the customer’s site.”

As for temps, the term “generally refers to employees of a temporary staffing agency who perform work on a temporary or seasonal basis.”

By these definitions, contract lawyers tend to work longer periods and under a contract and in connection with a certain kind of ultimate employer (See my post of July 17, 2008: contract lawyers with 12 references.). Temporary lawyers have shorter work-spans, handle less demanding tasks, and have a looser affiliation with one or more ultimate employers (See my post of Sept. 9, 2008: temporary staff with 8 references.).

My friend Tariq Akbar, CEO of LegalEase Solutions, sent me a link to 100 Best Outsourcing and Offshoring Blogs & Resources compiled by oDeskBlog. I have inserted below the portion for the five blogs under the category Legal Process Outsourcing:

1. LPO Market Insight Created by the team at Aphelion Legal Solutions, this blog contains articles like “What to Ask Before Purchasing LPO Services.”
2. Law Scribe Created by Mark Ross, one of the notable articles is “LPO: A Bandaid or an Innovative Solution.”
3. LegalEase Solutions Here, the must-read article is “Evaluating What Not to Outsource.” Though the blog has multiple contributors, it was created by LegalEase Solutions.
4. Legally Yours This popular LPO blog by Rahul Jindal has a focus on LPO and India, but the best article here would be More Than 100 Law Firms … Used LPO.
5. Slaw A Canadian collaborative law blog, Slaw touches on LPO often, especially in this article: “LPO Provides a Positive Boost for Economy in Recession.”

If you are interested in other blogs on offshoring, I assembled sets of them twice (See my post of Jan. 18, 2009: 15 blogs on offshoring; and Feb. 5, 2009 #2: more blogs about offshoring.).

Privately held companies often keep to themselves the amount of their annual revenue. Unfortunately, if their legal department’s management has an interest in benchmarking but won’t disclose corporate revenue, many key metrics are eviscerated.

Notably, lawyers per billion of revenue and total legal spending as a percentage of revenue implode. Indeed, any normalization of a metric divided by revenue becomes impossible and the value of that company’s data shrinks considerably.

A more subtle effect also happens. If the data skews toward publicly traded companies, with under-representation by private firms, the data loses to that degree a comprehensive scope. Privately held companies may have lower legal costs and staff numbers because they have less securities work, which covers both registrations or filings and shareholder derivative or other securities-based litigation. So the published metrics are likely to be somewhat higher than actually prevails because the (lower) studies undercount the lower data of companies without securities traded on exchanges.

Improve representativeness, you private companies (and public ones, too)! Click on the box upper right to take the six-minute, confidential online survey of your fundamental 2009 metrics and get your full report in April.

Academic theorists have named “the tendency of organizations in a particular sector to converge on a common way of working and set of beliefs that justify that way of working.” Institutional isomorphism is the off-putting label, but the term and its concept could apply to legal departments.

The practices and beliefs of general counsel at legal departments of much size, more so within a country and even more so within an industry, probably tend to become more similar. General counsel hear about a good method and adopt it. Useful innovations therefore evolve and spread – the meme message travels and takes root – and ideological conversion increases. Think of budgets, e-billing, matter management software, in-house e-discovery: the fundamental idea takes hold even though many individual variations persist.

Grist for this heady post came from the Financial Times, Innovative Lawyers 2009 at 44, but there in the context of law firms. The principle likely holds for legal departments. If nothing else, benchmark data pushes corporate legal teams toward more similar characteristics.

Shot through and through this blog’s 5,000 posts are references to “primary law firms.” One post tried to define the slippery term and gathered nine earlier references (See my post of March 23, 2009: definition of key, principal, primary, or major law firms of a department.).

Ubiquitous almost, mentions of primary firms actually appear far more often. Most of the posts that I found refer to the special impositions legal departments may place on their primary firms (See my post of Dec. 3, 2005: send partners to your conferences; Sept. 28, 2008: attend summits; Sept. 17, 2006: set up a client team; May 2, 2007: invest in understanding the company’s business; Dec. 3, 2005: have a relationship partner; Aug. 28, 2009: submit a periodic "value report; Feb. 2, 2010: discount rates; and Aug. 4, 2008: interventions with three posts and 40 references.). The more important a firm is to you, the more you may need to intercede in some of its operations (See my post of Jan. 12, 2009: intervention levels correlate with amounts spent on a firm.).

A few posts offer some metrics about primary law firms and metrics (See my post of Feb. 11, 2007: in smaller departments, about three law firms hired regularly per in-house lawyer; March 13, 2007: 11 firms accounted for 75 percent of the median company's outside counsel costs; and June 18, 2007: law firm panels with 13 references.).

Other posts comment on a miscellany of points (See my post of Aug. 10, 2009: high levels of loyalty by law departments to their go-to firms; March 6, 2007: the precarious hold of one's primary law firm – perhaps; July 8, 2009: pros and cons of an in-house lawyer responsible for relations with a primary law firm; Feb. 22, 2009: ten clues to the onset of complacency; and April 2, 2005: merger by one of a department’s primary firms.).