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A portfolio model of human capital – in the context of law departments

Human capital – “productive assets in the form of human competencies” – ranges from skills and assets that are specific to a company to those that apply in any managerial context. As described in the Harvard Bus. Rev., Vol. 84, May 2006 at 96, there are five rungs in this ladder.

Company-specific human capital includes what a lawyer knows about getting expenses reimbursed through a customized A/P system or the CEO’s long-standing belief in scorched-earth litigation. It is rarely portable.

Relationship human capital reflects an in-house lawyer’s familiarity with others in the department or in the company. The direct reports to the GC develop as a team, for example, or the Corporate Secretary is simpatico with the Board members.

Industry human capital sums up what the corporate lawyer understands about the “technical, regulatory, customer or supplier knowledge unique to an industry.” Energy lawyers know FERC.

Strategic human capital “is expertise gained from experience in situations that require specific strategic skills” such as reducing the number of law firms retained or analyzing data from a matter management system.

General management capital is the most generic, highest level, and most portable of the five. It encompasses the management skills necessary to “gather, cultivate, and deploy financial, technical and human resources.” General counsel who are promoted to another level rely on these skills (See my post of Jan. 27, 2006, and March 13, 2006 (#2)

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