Ideas for how to manage a law department better come from many sources. For me, as I read I note in the margins what I think of as “blog ideas” and later I go back and write those that still appeal to me. During the nine months since December 2010 the following 21 books that I read stimulated blog ideas that saw bloglight, so to speak. Most of them get credit for multiple posts.

1. John D. Barrow, 100 Essential Things You Didn’t Know You Didn’t Know: Math Explains Your World (Norton 2008) (See my post of April 15, 2011: a way to detect manufactured time records.).

2. Scott Berkun, The Myths of Innovation (O’Reilly 2010) (See my post of Dec. 27, 2010: eight myths of innovation.).

3. Amar Bhidé, The Venturesome Economy: how innovation sustains prosperity in a more connected world (Princeton Univ. 2008) (See my post of July 30, 2011: no patent, no fee.).

4. Len Fisher, The Perfect Swarm: The science of complexity in everyday life (Basic Books 2009) (See my post of May 20, 2011: stop unproductive processes.).

5. Rob Goffee and Gareth Jones, Clever: Leading your smartest, most creative people (Harv. Bus. Press 2009) (See my post of March 11, 2011: boundaries versus bureaucracies.).

6. Adam Gopnik, Angels and Ages: A short book about Darwin, Lincoln and modern life (Knopf 2009) (See my post of July 20, 2011: be more than fair with opposing arguments.).

7. Boris Groysberg, Chasing Stars: The Myth of Talent and the Portability of Performance (Princeton Univ. 2010) (See my post of March 24, 2011: hire the firm, the lawyer, or both.).

8. Steven Johnson, Where Good Ideas Come From – The Natural History of Innovation (Riverhead 2010) (See my post of Feb. 8, 2011: five creativity techniques.).

9. Richard Koch and Greg Lockwood, Superconnect: Harnessing the power of networks and the strength of weak links (Norton 2010) (See my post of Dec. 31, 2010: the strength of weak ties.).

10. John Lukacs, The Future of History (Yale 2011) (See my post of Aug. 8, 2011: aristocratic tales of law departments.).

11. Robert Matthews, 25 Big Ideas: The Science That’s Changing Our World (MJF Books 2005) (See my post of March 30, 2011: Extreme Value Theory.).

12. Sharon Bertsch McGrayne, The Theory That Would Not Die (Yale Univ. 2011) (See my post of July 30, 2011: the Central Limit Theory.).

13. Bruce Mazlish, The Riddle of History: the great speculators from Vico to Freud (Harper & Row 1966) (See my post of July 26, 2011: logical positivism.).

14. Deirdre N. McCloskey, Bourgeois Dignity: Why Economics Can’t Explain the Modern World (Univ. Chic. 2010) (See my post of March 10, 2011: Gemeinschaft compared to Gesellschaft.).

15. Joel Mokyr, The Enlightened Economy: An Economic History of Britain 1700-1850 (Yale Univ. 2009) (See my post of Feb. 18, 2011: teleology and the recreation of memories.).

16. Henry Petroski, Success through Failure: the paradox of design (Princeton 2006) (See my post of July 6, 2011: PowerPoint in law departments.).

17. Eduardo Porter, The Price of Everything: Solving the mystery of why we pay what we do (Portfolio/Penguin 2011) (See my post of March 16, 2011: prestige and neuroscience.).

18. Peter Sims, Little Bets: How breakthrough ideas emerge from small discoveries (Free Press 2011) (See my post of April 11, 2011: take small steps.).

19. James Stein How Math Explains the World: A Guide to the Power of Numbers, from Car Repair to Modern Physics (HarperCollins 2008) (See my post of Feb. 8, 2011: digraphs.).

20. Cass R. Sunstein, Infotopia: How Many Minds Produce Knowledge (Oxford 2006) (See my post of May 14, 2010: the egocentric bias.).

21. Hugh Trevor-Roper, History and the Enlightenment (Yale Univ. 2010) (See my post of March 30, 2011: philosophical management.).

22. Gordon S. Wood, The Purpose Of The Past (Penguin 2008) (See my post of April 14, 2011: micro-history and ethnography.).

23. Tim Wu, The Master Switch: The Rise and Fall of Information Empires (Knopf 2010) (See my post of Feb. 14, 2011: the Kronos effect.).

As part of my first-cut analyses of matter management system data from the General Counsel Metrics benchmark survey, I looked at the size of law departments. As measured by number of lawyers, the departments that use one of the eight most commonly identified systems, have a median of 27 lawyers; the rest of the group, including those that listed no matter management system, have a median of between four and five lawyers. They are much smaller.

No real surprise here; one would expect that larger groups of lawyers need more management tools, one of which is software for tracking matters and their expenses. As more data comes in from the GCM survey, it will be clearer where the so-called tipping point is: at what number of lawyers do more departments have matter management software than don’t. Of course, packages have different price points and capabilities, so even one-lawyer departments can find an appropriate match.

The other point to make here is that if size of department correlates with use of the major software offerings, then total legal spending as a percentage of revenue will look better for that group of software vendor’s clients. As revenue grows, the ratio of legal costs declines. The decline may have a bit to do with the legal software, but far more to do with other factors.

To get Release 3.0 in late September and its benchmark metrics for your industry based on 500+ companies, all at no cost, click here to take the General Counsel Metrics global benchmark survey.

As of this morning, 383 law departments have submitted their six pieces of staffing and spending data. They reported 9,394 attorneys, along with 2,535 paralegals and 5,281 other legal staff (medians of 8, 2, and 3, respectively). At a combined inside and outside spend of $9.6 billion, they supported $2.3 trillion of corporate revenue.

In addition to the 21 basic industries reported on by General Counsel Metrics, Release 3.0 in late September will have at least five specialized industry-segments, such as restaurants, national laboratories, medical devices, universities and others. Once there are six or more participants in an industry segment, the Release creates benchmarks just for them. Also of note, exactly 100 of the respondents are Fortune 500 or larger (more than $4.7 billion in revenue). Of them, 29 weighed in at $20 billion or more; the median revenue of the entire group, however, is $1.4 billion. At the smaller size, 60 of the departments reported corporate revenue of $100 million or less.

The group ranges across the world, with 62 percent being U.S. corporations. Of this year’s participants so far, 176 also took part in last year’s survey. Finally, 133 general counsel took the few minutes to personally complete the survey. They will receive the next release at no cost and can order customized reports if they wish.

“A combination of increasing automation, new business models, and offshoring has pushed down the average size of finance staff by 30% over the past six years – to 92 people per $1 billion of revenue.” The quote comes from CFO, Nov. 2010 at 48, and Hacket Group data, courtesy of Michel Janssen, chief research officer for Hackett. From my General Counsel Metrics benchmark survey, the median size of legal staff for 800 law departments last year came 9 people per $1 billion of revenue, 10 percent of the finance figure.

Then comes the stunning data on headcount reductions: “In the last 10 years, the average large global company has dropped about 30% of its finance, IT, public-relations, and HR staff.” Janssen estimates that productivity improvements account for twice as much of that slide as offshoring. Fortunately, law departments haven’t suffered anything like that precipitous drop.

Rotman Mag., Spring 2011 at 84, describes research by Haygreeva Rao, a Stanford professor of organizational behavior. Rao places much importance on the number of statements bosses make in meetings versus the number of questions they ask. “He argues that letting others speak and asking questions – real questions, not statements dressed up as questions – are powerful ways to encourage collaboration and creativity in your employees.”

To grasp this personally, a general counsel might bring someone to meetings to count and calculate the ratio of the GCs questions asked to statements made, as well as the ratio of time spent talking to time spent listening. The article suggests that you guess the results before the data comes back as that will provide a nice test of the accuracy of your self-awareness (See my post of Feb. 1, 2006: how to reduce the chilling effect of a dominant personality or position; Dec. 8, 2006: a GC’s chilling effect; Jan. 9, 2009: ideas are suppressed around a general counsel; and May 25, 2010: sense of futility, not fear of reprisal, silences employees.).

Academics conduct research that makes me envious. Consider a detailed study of contracts described in the Acad. Mgt. Rev., Feb. 2011 at 182. Three professors studied 385 contracts Compustar had entered into with buyers of its IT services. (Of interest to me was the statement that lawyers negotiated none of the contracts; “lawyers conducted a final-stage review of the contracts” (at 200).) The article focuses on extendability and early termination provisions in the contracts. To research their effect, the authors coded a number of variables regarding the contractual arrangement and the contracting party. They then conducted regressions to find answers to their hypotheses.

My point here has only a little to do with what this particular empirical research can tell law department managers about contracting activities. My main point is that the methodology of data collection and analysis can uncover what is going on in the world far more insightfully and convincingly than the anecdotal sense of even the most experienced lawyer. Once you count it, analysis it, and run regressions coupled with causal relationships, you reach a much deeper understanding of whatever you study. Academics can do this and they publish their findings. This article illustrates the power of that approach.

“The routines put in place to enhance productivity often hinder the practices that foster learning” This dispiriting trade-off comes from the Acad. Mgt. Rev., 2011, Vol. 36 at 461. Some scholars refer to this as the productivity dilemma: do something with formalized consistently and you retard improvement.

Law department managers want to lock-down repetitive activities, which speeds handling and improves overall quality. At the same time, once a process is codified and rules adhered to, those who follow the defined path have less incentive or reason to think of improvements. The same could be said about form documents. Standards clash with kaizen and one of them has to give ground.

After I noticed several visitors who reached this blog from Linex Systems, I looked at its website. A law department case study caught my eye and gives some background on a productivity tool for law departments. David Byrne is Head of Knowledge Management for BT Group’s legal department. Working with a team of 130 lawyers, he is always searching for “ways for our people to do more with less effort.”

With a distributed workforce, BT Legal relies on technology to make up for the lack of face-to-face contact. For example, the company became one of the first to adopt Linex Smart Alerts.

At BT they see Linex Smart Alerts as an important business tool: “We use it to share knowledge and work together. The system allows the company to monitor content from its panel of law firms, as well as tracking information from thousands of other sources." BT has integrated the system closely with its own SharePoint site. Information appears there directly, so lawyers do not have to log in to Linex themselves.

Every law department has a few law firms they view as their stalwarts, their old-reliables, their go-to firms. Sometimes called primary law firms, they are known quantities and qualities – they are the reigning incumbents. A more formal designation, and the more European term, is a panel.

My sense of the differences between the terms is that (1) a panel is generally larger than the normal handful of primary firms, (2) a panel handles a higher percentage of the department’s work, and (3) a panel has a certain duration, such as two years, and a rebidding for positions on it at the end of the term.

Having collected my posts twice before on panels, it fell time to update another metapost (See my post of May 19, 2009: Sainsbury panel; May 21, 2009: Nestles and its core panel; Aug. 19, 2009 #2: best practices for panel retention and management; Sept. 22, 2009 #2: rule of thumb for how many to invite; Nov. 13, 2009: Royal Bank of Scotland; Dec. 7, 2009: Telstra and its panels; Feb. 2, 2010: fairness to panel firms if the department hires a specialist; Oct. 7, 2010 #4: panels protect in-house attorneys from seekers of work; Dec. 3, 2010: Network Rail’s panel; Dec. 10, 2010: ITV’s panel; Jan. 14, 2011: psychological benefit of panels that reduce choices; March 16, 2011: French departments and panels; June 8, 2011: finding specialists even with panel; July 19, 2011: Liberty Mutual and 1,000 on panel; and Aug. 15, 2011: ProcureLaw and panel instructions.).

An early post suggested a number of advantages (See my post of July 5, 2006: large law departments have scale advantages: division of labor, specialization, and investment in technology.). They have streams of similar work so those who do it become more expert (See my post of Sept. 10, 2005 on specialist attorneys in large law departments.). They have the funds to invest in process improvements, knowledge management, software development and licenses.

Somewhat later I extracted posts that together touch on eight more advantages of large departments (See my post of July 29, 2009: aspects of large law departments.). As compared to smaller departments, large ones can support more and different kinds of resources (See my post of March 6, 2007: obtain accreditation for free CLE; March 12, 2006: maintain librarians; Aug. 27, 2005: enjoy the services of dedicated IT staff; Sept. 10, 2005: stock specialist lawyers; May 1, 2006: run internal think tanks; July 25, 2007: explore alternative fee arrangements; March 9, 2009: use slush funds for investments; and May 3, 2008: create internal discovery teams; Nov. 6, 2006: test organizational network analysis; and June 15, 2008: spend seed money for technology ventures.).

Hardly done, I would offer 11 more propositions. As compared to smaller departments, larger ones are more able to:

1. Take in different practices at a faster pace because they have more flex and resilience (See my post of Aug. 3, 2010: more absorbtive capacity.).

2. Purchase goods and services at bulk rates because their greater flow gives them more leverage (See my post of Feb. 14, 2007: agreements with vendors for large purchases over time.).

3. Get better lawyers from firms to work on their matters because of the professional interest of their problems, the ability to bill more, or the prestige of the client (See my post of Aug. 5, 2005: the A Team put on big clients.).

4. Borrow low- or no-cost lawyers from firms for the reason that large departments have more openings and more clout (See my post of Oct. 13, 2009: opportunities for secondments.).

5. Put work out for competitive bids since they have larger volume (See my post of Oct. 10, 2008: bigger portfolios are also an argument for convergence.).

6. Manage knowledge more effectively because they generate a critical mass of users and material (See my post of March 16, 2009: post mortems.).

7. Assign work horizontally and delegate vertically (See my post of Aug. 24, 2011: delegation compared to assignment.).

8. Take advantage of more connections since their aggregate personal network is denser (See my post of March 8, 2009: get a leg up from network externalities.).

9. Pay more because their companies are more flush and so attract and keep better lawyers (See my post of Dec. 6, 2006: richer benefits.).

10. Implement concept maps because they have more ideas circulating (See my post of Jan. 30, 2011: put conceptual schemas to work.).

11. Train more clients and train them better because the company is more settled and mature.