As I dig deeper into concepts, processes and tools of law departments, I fear spreading my net too widely. What makes the list and why leaves me unsure, yet it seems worthwhile to make the effort and think about the criteria. Perhaps to pin down management concepts central to general counsel presents a quixotic task, since they seem to multiply and complicate as I think about them.
That said, here are 21 more that seem to me important enough to deserve mention: Alignment, Behavioral economics, Creativity (innovation), Databases, Document retention, Dual reports, End-to-end review, Information economics, Kaizen, Management, Matrix, Neuroscience,,Opportunity cost, Option, Pro bono, Psychology, Reward, Statistics, Surveys, Team (collaboration), and Technology (See my post of Jan. 23, 2012: Part 4 and cites the previous posts.).
Some of those who think and write about law departments create taxonomies to classify what they study. A taxonomy creates superordinate categories that are similar on a number of different underlying dimensions. “Structure of legal departments,” for instance, allows a taxonomy that could include centralized, decentralized, hybrid, global, multi-level, etc. Or, “Staff” embraces lawyers, paralegals, executive assistants, clerks, administrators, clerks, contractors, interns, and more. The Association of corporate counsel categorized law departments along a number of dimensions (see my post of June 5, 2011: “traditional” vs “proactive” firms.). Maturity models also try to create taxonomic description (See my post of Aug. 10, 2011: model proposed for outside counsel management.).
Good taxonomies clarify; poorly done, they retard progress. As critiqued in the Acad. Mgt. Rev., Jan. 2012 at 83, some taxonomies have limited usefulness. They might create too few categories, notably just two, which ends up with sweeping alternatives that are too broad to allow precise understanding and powerful prediction. If someone sorted all software used by in-house legal teams into “productivity” or “information flow,” that taxonomy would run afoul of this weakness.
Second, some categories are either/or, dichotomous, when that is really not a clean distinction. For example, “progressive law firm” versus “conventional law firm” grossly characterizes and lumps a huge array of firms.
Third, if the taxonomy creates additional dimensions such as a 2 x 2 system let alone a 2 x 2 x 2 system, it is difficult to meaningfully label and find conceptual examples for each cell. The famous BCG taxonomy of portfolio companies had only four exemplars (cash cows, stars, etc.). If each taxonomic category needs its own name, this poses problems. Think of alternative fee arrangements along the three dimensions of quality enhancing, cost reducing, and transactional ease – very hard to label each of the eight permutations!
Next, the article says that even with a well developed taxonomic structure you are still left with a nominal measurement system. "Measurement scales are ordered in terms of refinement, from lowest to highest, as (1) categorical, to (2) rank orders, to (3) equal intervals, to (4) ratio scales. Taxonomic systems are expressed in nominal terms, necessarily implying that all people, things or activities within the category are equal in the characteristics that define the type. For legal departments, that would be quite reductionist.
Finally, even if you pick an ideal type for a category, the other things you assess there probably have a normal distribution around it. As a simple example, if one type of department in a taxonomy were “large,” inevitably other departments in that category would have some attorneys more or some attorneys less.
I like some rules promulgated by Nick Jarrett-Kerr of Edge International in the firm’s latest Communique. Written for law firm managing partners, the advice holds true for general counsel.
“Rule 1: not many decisions are very important. Rule 2: the most important decisions are often made by default.” [Jerrett-Kerr doesn’t write this but I urge my consulting clients to spend 80% of their time on the very few decisions that are likely to set in train the most important consequences.] “Rule 3: for important decisions gather 80% of the data and perform 80% of the analyses in the first 20% of the time available, then make a decision 100% of the time and act as if you are 100% confident in the decision.” [I am less sure about the 100% confidence, since everyone knows that tough decisions are not black and white. Still, once a decision is made, it is best for everyone to be full-scale behind it.] “Rule 4: if what you have decided isn't working, change your mind earlier rather than later.” Rule 5: when something is working well, double and redouble your efforts.”
My sense of the term “strategic planning” has been an exercise by a legal department to look ahead a couple of years and try to anticipate evolving needs for legal services and skills. What might happen in the future and how can we best prepare for it? My recent posts on strategic planning by general counsel have explored aspects of this definition (See my post of Feb. 19, 2010: DuPont’s strategic litigation budget; March 1, 2010: complex strategic plan with 30 indicators; Sept. 28, 2010: strategic review of patent holdings; June 5, 2011: difficulty of foreseeing bulk of Dodd-Frank; June 23, 2011: linking risks to strategic objectives of the company; and Oct. 30, 2011: plan your technology path, if not your departmental path.).
An article in ACC Docket, Dec. 2011, at 70, however, led me to realize that the author uses the term “strategic planning” to mean something different, improving the effectiveness of the department. Future scenarios and contingencies play no part in his four steps, which mostly involve identifying and streamlining core competencies along with “setting specific goals and priorities for the law department.”
What are some of the beliefs most lawyers in the United States take for granted, rarely consider or even notice, regarding corporate law departments? We are all blind to our own habituated views that we do not observe, to say nothing of articulating or even less questioning, what is “the way it is” or question the formative assumptions that guide our actions and thoughts. Some of those views missing in plain sight might be the following:
Litigation in court is the highest embodiment of legal representation.
Partners in law firms stand at the top of the law practice ladder, not in-house lawyers.
Lawyers should be virtually omniscient regarding their area of law.
Clients wish they did not have to resort to lawyers, especially those in cost centers.
The passage of years improves a lawyer’s judgment.
Lawyers are rational and objective.
To practice law is as much art as science.
Lawyers are intellectually superior to non-lawyers.
Lawyers abide by stricter standards of integrity and professionalism.
At a recent conference run by ALM, the general counsel of Rockwell Collins spoke about Six Sigma principles applied in his department. One of his slides addressed processes to determine alternative fee arrangements, and it mentioned “design decision-trees for process.”
Whenever a law department does some set of steps repeatedly – a process – it can take the time to look at who has to make decisions regarding what happens during the process and when. Once those points are identified it is not much more to create a decision-tree that embodies what has been learned. The diligent law department can even annotate the decision-tree with its accumulated experience (See my post of June 17, 2009: decision tree software with 6 references.)
John Maynard Keynes, eloquent and acute as always, offered his view on the study of economics and its tenuous link to practical applications: “The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique for thinking, which helps the possessor to draw correct conclusions.” Keynes is quoted in the NY Times, Dec. 4, 2011 at BU 4.
Notions of how law departments are or should be managed are nowhere near as delineated and theorized as economics (See my post of June 6, 2006: best practices with 4 references; and Feb.14, 2009: best practices with 24 references and one metapost.).
Even so, just as economists don’t agree on what policies to follow, but at least try to think about problems with similar tools and assumptions, so too law department managers who try to honor an emerging discipline – such as it is – can’t say what is best but can share a framework for thinking about it. I’m doubtful there is even an inchoate, consensus framework (See my post of Jan. 5, 2010: economics, sociology and psychology as frameworks.). Aptitude as a manager in a legal department follows from a way of thinking, pragmatism, and a set of tools, not theory (See my post of July 8, 2011: toolbox-style management.).
The fast-function part of our brain, that which Daniel Kahneman refers to as System 1, operates mostly in three parts of our brain. Strategy + bus., Spring 2011 at 47, describes each of them briefly. These emanate from deep, primal parts of the brain that evolved relatively early.
One is the basal ganglia, which normally manages such semi-autonomic activities as driving and walking (See my post of May 30, 2006: habits, and the challenge of change, due to basal ganglia.).
The second is the amygdale, a source of emotions and fear and anger (See my post of Feb. 12, 2006: the amygdala hijack.).
The third musketeer is the hypothalamus, which manages instinctive drives such as hunger, thirst, and sex (See my post of Nov. 29, 2011: willpower, glucose and the hypothalamus.).
In-house counsel pride themselves on objective analysis and reasoned decisions. Deep within their brains, three old-world clumps of neurons often make a mockery of that hubris.
(1) Some people maintain that “risk” is not an independent something waiting to be measured. It is, instead, completely definitional, situational, cultural, and malleable. As part of this argument, think about all the ways a “legal risk” might be described: delay, money lost, reputation besmirched, time wasted, share value diminished, lousy law passed. The protean notion of risk rests heavily on cultural and financial expectations, both of which have historicist determinants.
(2) Risk smacks of power – whoever defines how risk is identified, prioritized, measured, and ameliorated benefits from that version of the concept, which means the power of that person increases. To the extent risk recognition sets things in motion, someone gains power and someone loses. Daniel Kahneman, Thinking, Fast and Slow (Farrar, Straus & Giroux 2011) at 141, inspired the groundwork for these two observations.
(3) Kahneman at 143 also makes the point that our “risk math” is cognitively flawed. He gives several examples of “a basic limitation in the ability of our mind to deal with small risks: we either ignore them altogether or give them far too much weight – nothing in between.” For a lawyer in-house, this leads to remembering the one time in the past 16 years where the force majeure clause was invoked, and so fixates on that tiny risk or, at the antipode, simply doesn’t give a thought to the clause. Kahneman puts this mental foible in math terms: when our brains estimate probabilities, they over-emphasize the numerator we recall and under-state the denominator of all the instances
This blog has returned to the concept of legal risk quite often in the recent months (See my post of July 19, 2010: 7 commonalities between the constructs of "risk" and "value"; July 29, 2010: 7 koans on "legal risk"; June 23, 2011: problematic to link legal risk to corporate strategy; July 26, 2011: logical positivism would ignore risk; July 27, 2011: risk management as a contender to economic models of law departments; Oct. 3, 2011: view that GC should not be in charge of risk management; and Nov. 29, 2011: bold, risky leadership results in worse decisions.).
Much has been made about expertise being the payoff of 10,000+ hours of disciplined, thoughtful practice (See my post of June 12, 2005: Herbert Simon’s 10-year rule on expertise; July 15, 2005: how to increase "deep smarts."; Nov. 6, 2006: effortful study over time, plus motivation; Jan. 18, 2007: concentrated work and further effort; March 4, 2008: compensation may reflect immersion over years; and April 29, 2010: hard, deliberate practice matters more than innate talent.
An article in the NY Times, Nov. 20, 2011 at SR12, concurs that immersion and focused learning over time goes a long way. Practice, done right, helps to make perfect. But the writer makes two further points. Based on extensive research, “’working memory capacity,’ a core component of intellectual ability, predicts success in a wide variety of complex activities.” You test working memory by having someone try to remember information (like a list of random digits) while performing another task.
Second, the author says that scores on the SAT correlate so highly with IQ that some regard it as a thinly disguised intelligence test, which correlates to working memory capacity. Possibly LSAT scores translate the predict the same way and as well.
Might law departments start to ask for SAT/LSAT scores and working memory results when they recruit? Experience counts, heavily, but in a rapidly changing world, a rapid-fire mind may count more heavily.
