Articles Posted in Showing Value

This is an oscillating best practice, with supporters of in-house patent groups as well as supporters of “send the work out.” On one side are those IP lawyers who see ample value when they prepare and prosecute patents in the United States (See my post of Nov. 13, 2005: Motorola formed internal group to prepare patent apps; Jan. 16, 2006: about 30 applications per year by in-house lawyers; Feb. 14, 2007: SAP Canada filed 1,700 patents in 2005; April 22, 2009: Cisco’s guidelines for patent preparation and prosecution; July 21, 2009: query about data on numbers of patent applications by in-house lawyers; Aug. 17, 2010: H-P taking back the procurement of patents; and Oct. 14, 2010: average of 23 patent apps per year per in-house attorney.).

A chorus of posts take the opposite view: lawyers within companies should not spend their time drafting patent applications and responding to office actions (See my post of May 18, 2010: Electrolux maximizes the value of its portfolio rather than its size; Aug. 17, 2010: Xerox farms out prep and prosc; Sept. 28, 2010: in-house patent attorneys should take on more strategic roles; Dec. 4, 2006: patent prep is less strategic; May 23, 2007: strategically invaluable, yet prosecution often a tactical commodity; Dec. 14, 2005: in 2001 Viacom chose from among 20 law firms to handle its patent prosecution work; and Jan. 4, 2009: IP specialist firms selected for patent prosecution.).

On the whole, mindful of the pros and cons, I side with those departments that look to law firms, on fixed costs (although usually with tiers for difficulty), for most of their patent procurement services.

In a previous post, I commented on the frequency with which convergence and off-shoring showed up among the innovative law departments honored in the past month by the Financial Times (See my post of Dec. 3, 2010: seven law departments and two focused initiatives.).

A careful reading also discloses among the short descriptions at least six references to risk and management efforts. BAE Systems has developed a system to enable global compliance training. Unilever “implemented comprehensive anti-trust training across the organization for more than 7000 managers” while COFRA Holding “introduced a risk-control process based on interactive dashboards.” Standard Chartered “devised a unified vision for risk management across the business.” HSBC formalized its approach to legal risk management and “developed a database to store and assess risks arising across the legal function of each business unit” while Siemens was busy “devising tools to improve risk management and training.”

The implosion of the financial system two years ago continues to reverberate through law departments. With systems, training, visualization, technology, and awareness, in-house lawyers are tackling the Hydra of risk.

A company that has been in business twenty years or more has often accumulated barnacles of legal problems – companies or assets sold with long-term liabilities retained, past mistakes with legal tails such as environmental cleanups, products sold or installed years before that are now class action magnets. New companies have smooth skin, no legacy legal wrinkles. They face current problems, but so do established companies, but the fresh-faced companies do not have scars to deal with.

Typically, the legal department is saddled with responsibility to cope with the forgotten drains, unremembered, unwelcomed, unrecognized, and unlikely to go away any time soon (See my post of March 18, 2005: perhaps 40% of spend looks backward; July 16, 2005: legacy litigation; Oct. 8, 2005: litigation lawyers who handle legacy issues don’t belong in any business unit; April 2, 2006: clients apathetic about legacy litigation; Oct. 25, 2007: dormant cases are usually legacy; July 31, 2006: appoint a czar to oversee orphan litigation; Sept. 9, 2010: intractable issues are an internal lawyer’s plight; and Nov. 1, 2010: corporate general ledger account.).

Just before the Thanksgiving break, InsideCounsel Exclusives published my column on risks and metrics. In essence, the two words do not go together. The coupling of risk and measurement is oxymoronic, much to the disappointment of those who manage law departments and want desperately to quantify their value. Click on this link to read the column from Morrison on Metrics (Nov. 22, 2010).

In the course of explaining to the law department a set of fundamental beliefs, a well respected general counsel included the injunction in the header. Some of the attendees at the conference were not familiar with the phrase “making sausage.” To the general counsel it meant that lawyers should present well reasoned, fully-baked recommendations and conclusions. In-house lawyers should not subject clients to the grinding, mixing, and flavoring that led the lawyer to the conclusion that went into the sausage. The effort need not concern the client.

That view holds, to be sure, when the in-house lawyer wants to portray a confident, well-thought-out conclusion plus recommendation. What gives me some pause, however, is that it possibly leaves clients with the impression that what the lawyers do comes easily, logically, without contrary positions and difficult judgment calls. If everything seems a cinch, how can clients appreciate the training, hard work, experience, and thoughtfulness of their counselors – the value they deliver?

A core competency of a law department has to do with its outputs, what it delivers not how it produces it. So, with this definition of the term, it does not include characteristics of the legal team, a mistake I have made several times (See my post of March 15, 2006: integrity; June 26, 2008: set good priorities; June 9, 2010: make decisions; and July 5, 2010: think clearly.). A core competency might be contract execution but it is not effective writing, document assembly, precedent databases, paralegal roles, or templates.

Many posts have dealt with core competencies of law departments (See my post of May 27, 2008: IP lawyers ought to be core competencies quite frequently; Sept. 9, 2009: keys to effectiveness: role clarity, division of labor, core competencies, delegation, resources, and processes; Aug. 17, 2009: performance mapping and key competencies; Jan. 12, 2010: “core/non-core” compared to “critical mission”; and April 28, 2008: no company sees litigation as a core competency.).

A few have given instances of core and non-core services (See my post of May 24, 2005: Cisco divides legal work into “business development” or “transactions, litigation and general corporate support; Aug. 25, 2010: at Johnson Controls, commercial contracts, corporate work, and antitrust; Nov. 9, 2008: not core — anti-counterfeiting, compliance, contract management, environmental health and safety, insurance procurement; lobbying, workers compensation; and May 23, 2008: core competence with 12 references.).

The yin-yang of in-house legal counsel appeals to me as a metaphor, and there are others (See my post of Nov. 7, 2010: metaphors with 25 references.).

Law departments slash with a “sword” that asserts the rights of the company while they brandish a “shield” that protects the company from legal attacks. Alternatively, the “carrots” of law departments lead business units to make money within the constraints of the laws: the “stick” of obstacles and unacceptable legal risks do likewise.

From a more complicated metaphorical perspective, ignore the meaning of “checks” as stopping something and redefine them as drafts for payment. With that, law departments are “checks” as positive contributions and traditional “balances” of guiding the business away from unknown or excessive legal risks.

The excellent movie about Facebook’s Mark Zuckerberg, Social Network, has a couple of fleeting references to a corporate lawyer. The “rowing twins” who eventually sued Zuckerberg call their wealthy father’s in-house lawyer for legal advice when they believe Zuckerberg has stolen their idea. Later, Zuckerberg and Eduard Severin, his sort-of CFO, discuss a cease-and-desist letter that same lawyer apparently sent Zuckerberg.

I previously wrote about Tilden Swinton as the ethically-challenged GC in Michael Clayton (See my post of Nov. 10, 2007: the movie, “Michael Clayton.”). This most recent depiction of an in-house lawyer fares no better because the lawyer clearly has assisted the sons of the President, which is not in the position description of such a lawyer.

Intell. Prop., Fall 2010 at 13, honors “the 25 most influential people in IP.” Of that esteemed group, seven in-house lawyers appear. They include Robert Armitage, the General Counsel of Eli Lilly; Terri Chen, Chief Trademark Counsel at Google; Daniel Dougherty, Associate General Counsel and the top IP lawyer at eBay; Michael Fricklas, General Counsel of Viacom; Richard Lutton, Jr., Chief Patent Counsel at Apple; William Patrey, Senior Copyright Counsel at Google (and blogger); and Fred Von Lohmann, Senior Copyright Counsel at Google.

Quite amazingly for a trade journal aimed at lawyers, not a single law firm has a representative. Amidst judges, professors, and government agency leaders, it is a statement of the growing influence of legal departments to have such strong representation as leaders in their field. Lawyers at industry leading companies play central roles at the frontiers of intellectual property.

In-house managers of law firms should shift to law firms part of the burden to show whether they are cost effective. How might firms do this? That I leave to the ingenuity of law firm partners but it could start with a quarterly report on value-added activities.

Even if a firm cannot show excellence and value provided, at least the law firm can show effort and procedures. For instance, the lawyers who represent a company meet once a month and consider a checklist of worthwhile efforts they might have done. At least such a procedure raises consciousness.

We all concentrate more on outcomes, but process steps are a good surrogate, on the expectation that processes followed diligently will result in better outcomes. My view about how to push firms to articulate what they contribute starts with their awareness, moves through efforts, and culminates in demonstrable results.