Articles on Thoughts/Observations

Rees Morrison’s Morsels #169: in brevia-blogia veritas

Another blog by a general counsel.  London-based general counsel Brett Farrell returned to an in-house position with an online financial services company in late 2011 after spending two years in private practice with U.K. firm Barlow Robbins.  Farrell has only been blogging for a few months, so let’s see how his site, Brett Tech Lawyer, fares (See my post of Feb. 17, 2011: eleven other examples.).

 

Discount from firm based on marketing costs avoided.  According to Law Practice, July/August 2012 at 40, “today, many firms’ marketing budgets range between 2.5 and 3.5% of their revenue.” At that level of expenditure, if your law department commits work to a firm that does not then have to incur marketing costs, the savings would seem to be the minimum reduction in fees that they could agree to.  In that light, a five percent fee discount seems miserly.

 

Document management in legal departments.  World Software Corporation announced several new clients, including Matrix Energy’s legal department.  According to the release, more than 5,000 organizations rely on the Worldox DMS, a document management package, including law firms, legal departments and financial services companies.

 

More quotes disparaging statistics.  “Surveys show that 117 percent of Americans don’t understand statistics, and 92 percent of them don’t care about them.”  I winced when I read this quip in the Atlantic, July/Aug. 2012 at 148, by Jeff Goldberg.  A quote from Winston Churchill made me feel worse: “Never trust any statistics that you didn’t forge yourself,” from the Times Lit. Supp., June 29, 2012 at 34.  Finally, a contemporary of Plato, Isocrates, wrote, “It is far superior to have decent judgments about useful matters than to have precise knowledge about useless things.” This came from the NY Times Book Rev., July 1, 2012 at 14.  That quote echoes some of the antagonism people voice about benchmarks.

 

Interviewing techniques beyond the tried-and-true.  Caren Ulrich Stacy wrote and asked me, “Do you know of any legal departments that use skills assessments, behavioral interviewing, case interviews, panel interviews – – anything other than the typical, basic one-on-one interview – – to hire their top lawyers?”  I searched on this blog and thought about Caren’s question – but came up almost empty (See my post of Jan. 1, 2006: past behavioral interviewing; and Jan. 1, 2006: competency interviews compared to IQ tests.).   Has anyone run across any examples of what Caren is looking for?

Several advantages when you have your in-house lawyers present to the rest of the legal team

Thomas Lalla, the General Counsel of Pernod Ricard USA, makes a good suggestion about professional education. Writing in InsideCounsel, April 2012 at 10, Lalla urges law departments to “incorporate in-house training conducted by members of your legal team.” By this I presume he means that if your attorneys give short presentations on substantive legal or practice topics, they will become better at presentations and they will learn their material better.

 

That’s not all.  The material prepared might help educate clients or be posted to an intranet site.  Others in the department, furthermore, will increase their knowledge and perhaps become a bit more versed should they be called upon to back up the presenting attorney.

Obiter dicta on costs of patent litigation and the extravagance of discovery

As paraphrased in MOFO Tech, Spring/Summer 2012 at 18, an appellate judge made two intriguing statements, one about the relative costs of intellectual property cases – presumably patent cases – and the other about discovery’s wastefulness.

 

Federal Court of Appeals Chief Judge Randall R. Rader “noted that IP cases were nearly two-thirds more expensive than others.”  The article does not explain the judge’s data that supports his assertion and it would require extensive research to clarify and substantiate it. A judge would not know how much the parties spend during litigation, generally speaking, and would not have a representative sample of cases from which to derive the metrics underlying the remark.

 

Judge Rader also observes “less than 1 in 10,000 of all documents found in discovery ending up in a trial exhibit.”  The drastic shrinkage from the point of location of potentially discoverable documents, or even from the smaller set of documents formally produced, to those introduced into trial is not at all surprising. For one, it is a rare lawsuit that proceeds all the way to trial. Thus, documents might have been quite telling before that.

Rees Morrison’s Morsels #168: the long and the short of it (in brevia veritas)

Functions, linear and otherwise. A function of some variable is linear if the plot of the function creates a straight line when you plug in different values for the variable. Think of X=3Y. If you plug in different numbers for the variable Y, the function of that equate creates a straight line. Function is another way to refer to the equation that summarizes the relationships between numbers. As an example, the larger the law department, the lower its total legal spending as a percentage of its company’s revenue – that is a function. The variable would be the revenue and the output graphed would be a line with different spending benchmarks (See my post of July 25, 2010: linear descriptions of data with 11 references.).

Another criticism of the Delphi technique. A 1991 study “showed that the Delphi was no more accurate than other decision-making methods, because ‘consensus is achieved mainly by group pressure to conformity.’” This debunking comes from David Orrell, Apollo’s Arrow: the Science of Prediction and the Future of Everything (Harper 2007) at 240 (See my post of Dec. 9, 2005: Delphi technique — nominal group technique; Feb. 1, 2006 #1: introduced in 1964 by Rand researchers; Aug. 25, 2009 #2: criticism of Delphi technique based on same research; and June 16, 2011: two descriptions of the technique.).

An app from TyMetrix for rate information. LTN Law Tech. News, June 2012 at 54, mentions that TyMetrix offers a free app for mobile devices that uses data from its Real Rate Report to provide average hourly rates of law firms (See my post of May 31, 2012 #2: first law department app.).

State taxes on legal services. Other than in five states, law departments do not have to pay state taxes on legal services billed to them. The exceptions are Delaware, Hawaii, New Mexico, South Dakota, and Washington according to Legal Spend Management: An International Perspective, a white paper produced by Jeff Hodge and Bridgeway at 3 (See my post of July 17, 2005: currency complications and VAT; and Dec. 1, 2006 #4: US state taxes on law firm services.).

A metaphor to visualize why companies spend lower percentages on legal services as they grow larger. Thinking about why increasing revenue correlates with decreasing legal spend as a percentage of revenue, a metaphor captures such economies of scale. Visualize the demand for legal services by a company as multiple pipes that at different times and volumes flow into balloons of varying sizes. Each balloon stands for a lawyer (let’s simplify away all the other staff). Some balloon lawyers are too big for the pipe that fills them, so there is “untapped capacity”; some balloon lawyers are too small to catch all their flow. As law departments grow and add balloons or adjust existing balloons, they better match them to the flows. The larger the department – the meta-balloon – the more efficiently it matches the demand for legal services (See my post of Nov. 7, 2010: metaphors cited explicitly on this blog with 25 references.).

A clever and funny send-up of law departments and their reviews of marketing material

On the last page of NJBiz’s special issue, General Counsel of the Year Awards (2012), Heartland Payment Systems placed an ad honoring Charles Kallenbach, its General Counsel. At the top, the full-page ad says “Congratulations to Charles Kallenbach for receiving the highest honor ever bestowed upon a human being by the nation’s top business magazine.” [I can’t do strike-throughs on this blog platform, so imagine the bold words marked out]

That touch of hyperbole is struck through and this follows: “Congratulations to Charles Kallenbach for receiving the highest honor ever.” It too is crossed out.

Finally, in the middle of the page, there remains “Congratulations” and under it, in much smaller type is “(Sorry Charles, our legal department had to approve this.)”

My congratulations to those in the legal department of Heartland, or to whomever, with the sense of humor and style to come up with the funniest law department ad ever published. Strike that!

The impressive activities in Asia of the In-House Community

The In-House Community comprises over 18,000 in-house lawyers and those with a
responsibility for legal and compliance issues within organizations along the “New Silk Road.” The New Silk Road is their clever term for a broad swath of the world from Asia through the Middle East. The activities of the Community include the annual In-House Congress circuit of events, Asian-MENA Counsel magazine and Weekly Briefing, and the In-House Community online forum.

One notable feature of Asian-MENA Counsel is the plethora of recruiters who focus on the in-house market. The placement scene must be frothing and bubbling over there! In the latest issue I noted full-page advertisements for seven of them: ALS Recruit, cml, Hughes-Castell, Legal Labs Recruitment, Lewis Sanders, Pure, and Taylor Root.

Rees Morrison’s Morsels #167: the long and the short of it (in brevia veritas)

In-house counsel app. Thomson Reuters has released what it believes is the first iPad app delivering corporate counsel specific information. Called GC Advisor, the app offers information, technology and legal research tips, as well as articles and CLE classes. There is also an RSS feed to CLE-accredited webcasts from the West LegalEdcenter and to Twitter feeds. The app is available from iTunes, according to Charles Christian’s American Legal Technology Insider, May 2012 at 5 (See my post of Feb. 1, 2011: app industry for matter management functions; and April 15, 2011: information delivered in-house by mobile apps.).

How many in-house lawyers practice full-time in New York State. Under a rule promulgated in 2011, Part 522, “All in-house counsel employed full-time in New York as of Part 522’s effective date, April 20, 2011, were required to apply for registration within 90 days of the effective date.” This update comes from NYSBA Inside, Spring/Summer 2012 at 16, which is devoted mostly to the attorney-client privilege. Here is a way, perhaps, to find out how many in-house lawyers are in one of our largest states, and perhaps even how many law departments! To learn more about the New York requirement, write one of the co-authors, Vincent Syracuse (See my post of May 23, 2012: in-house attorneys in the United States.).

Extravagant number of lawsuits in Brazil would skew metrics. It seems innocuous to ask on a survey for “your number of pending lawsuits.” Then I read in Alternatives, the newsletter of the International Institute for Conflict Prevention & Resolution, May, 2012 at 120, about Brazil, “with 70 million court cases now pending.” A Brazilian litigator observed that “It’s very cheap to litigate in Brazil” and that cases routinely drag on for 10-15 years. It would totally distort a world-wide count of cases, such as for a benchmark study, if a company doing business in Brazil has more there than everywhere else combined.

Scale analysis. John Brockman, Ed., This Will Make You Smarter (Harper Collins 2012) at 185, offers a discussion by Giulio Boccaletti on scale analysis. The author claims that scale analysis is “one of the most robust bridges between the linear and the nonlinear, the simple and the complex” (See my post of Aug. 25, 2009 #4: law departments as complex non-linear adaptive systems; and Nov. 26, 2011: chaos theory and legal departments.).

Gender difference in raises expected for joining another company’s law department. From the ACC Docket, May 2012 at 18, which draws on a study done by a recruiter, comes a troubling finding. “Men, who said they would require, on average, a 19.2 percent rise to move, expected more than women, who expected only 13 percent.” The recruiter suggests that women take more into account that just salary, but it could be that women need to have more confidence in their abilities and the compensation they deserve.

Part LXIX in my series of collected metaposts embedded in other posts

  1. Attorney-client privilege II (See my post of Feb. 28, 2012: attorney-client privilege with 13 references.).

  2. Boards and GCs (See my post of May 13, 2012: general counsel and boards of directors with 9 references and 1 meta.).

  3. Budgets, quarterly (See my post of May 30, 2012: seek quarterly budgets from firms with 8 references.).

  4. Co-location of lawyers with revenue (See my post of May 25, 2012: quantify lawyers by location near revenue with 9 references.)

  5. Concept visualization (See my post of March 7, 2012: concepts visualized with 8 references.).

  6. Logical reasoning (See my post of April 26, 2012: fallacies with 6 references.).

  7. Government agency law departments (See my post of May 13, 2012: law departments of government agencies with 19 references.).

  8. Math concepts (See my post of April 17, 2012: seven sophisticated math concepts with 8 metas.).

  9. Number of in-house US lawyers (See my post of May 23, 2012: in-house law departments in the U.S. with 10 references.).

  10. Tools (See my post of April 17, 2007: “tools” defined and in this blog, by category, with 73 references.).

Six observations gleaned from patent activity by a company that rarely seeks patents

An article about how an actuary at Towers Watson obtained a patent for a statistical algorithm, in the NY Times, May 13, 2012 at BU7, raises several points about law department management.

Initially, the employee cleared with his boss that it would be worthwhile to obtain a patent, and then “worked with an outside patent firm to translate technical information into layman’s terms for the application.” The Towers Watson law department probably lacked patent experience and had to find and retain a specialty firm.

Later, the lawyer who started the patent application left the firm and someone at Towers Watson had to decide whether to stick with the firm or move the project with that lawyer (See my post of Aug. 14, 2005: transitioning matters; July 21, 2006: moving matters; and June 13, 2006: the decision to hire the firm or the partner.).

Third, during the firm’s review of prior art – patents already granted that might deny the idea’s patentability – the actuary had to check a dozen of them for similarity. Stated differently, even though the law department handles a matter, clients have significant input.

Finally, to decide whether to file a second application for accelerated review required a cost-benefit analysis, including competitive positioning (See my post of Feb. 19, 2009: invention review committees with 7 references.).

The first application took more than two-and-one-half years from filing to approval, and the second (the accelerated application) took a bit more than a year. This exemplifies how law departments need to explain to clients such delays and keep them abreast of developments.

Finally, the inventor was given a plaque and $2,000 when the patent actually issued. Such a corporate practice increases the work load of the legal department and increases its spending (See my post of Dec. 13, 2010: awards to compensation for inventors with 6 references.).

General counsel who leave and take up consulting to law departments, other in-house lawyers, and even non-lawyers

Almost seven years ago I listed 12 general counsel who had turned to management consulting after their stint as a top lawyer (See my post of July 31, 2005: from Bob Banks to Peter Zeughauser.). It seems so natural, but successful career shifts from practicing to preaching are difficult. I made the point back then, understatedly, that “some have succeeded.”

To the list from long ago I can add Kevin Blodgett (formerly of Dynegy), Jim Boeckman (from Toppan Photomasks), Ron Pol (Acting GC at several New Zealand entities), John Wallbillich (from a Midwestern energy company) as well as Scott Ewart, a former general counsel of two Canadian companies. Some in-house lawyers come to mind who were not general counsel but later tried their hand at consulting (Suzanne Hawkins, Duncan Smith) and at least two others that I know of are doing so now.

In the vintage days of consulting to legal departments, the field counted quite a few who had no law degree, let alone had practiced law in-house. Those included Bob Berkow, Jon Bellis, Dan DiLucchio, and a raft of others. Even now several non-lawyers dispense management advice to general counsel, including Richard Stock and Helene Trink.