Articles Posted in Thoughts/Observations

Cytec Industries, a $3 billion company that produces engineered materials and specialty chemicals, has a legal team of “16 lawyers, four paralegals, an export compliance manager and a government relations manager.” The entire team met for four days in Seattle and according to a profile in the ACC Docket, March 2011 at 70, “Monetary costs of the meeting included accommodations for all staff, meals and travel expenses. The total was approximately $40,000.” Since team members flew in from California, Arizona and Shanghai, that was bargain-basement!. If 22 people could fly and sleep and eat for less than $2,000 each, Cytec has a sharp eye for value.

As a second observation, no administrative staff are mentioned. I have to believe that 20 paralegals and lawyers, not to mention the other two managers, have some secretarial support. By normal benchmarks the lawyers, alone, would have 3-5 secretaries.

Lastly, note the two specialists: government relations and export compliance. Several other law departments included experts on import and export regulations (See my post of Aug. 5, 2005: a “pre-law” group; June 11, 2008 #5: export compliance software at GM; Oct. 21, 2009: online decision tree software for import/export; June 29, 2010: Polaris Industries and its export compliance; Sept. 9, 2010: Sony Ericsson has export experts in the legal function; and Jan. 11, 2011: Northrop Grumman lawyer’s newsletter.).

It is often said in blog posts, articles and conferences that general counsel of US companies are managerially advanced compared to general counsel of the rest of the world. “Them’s fightin’ words,” you could say! How someone could demonstrate such superiority stumps me.

If there were a dozen fundamental management outcomes or practices for law departments, and if you could persuade a representative group of general counsel in several countries to fill in objectively where their department stands on the scale, you might be able to muster such a claim. Not without difficulty, because optimal practices remain unproved. More likely, the claim arises from nationalistic fervor and another manifestation of American exceptionalism.

At the corporate level, I would not want to argue that American companies, by and large, display better management than do competitors elsewhere in the developed world. Again, to referee such a broad and contentious claim could keep legions of business school professors feuding and fighting for years.

1. An effective law department: a common notion but it lacks construct validity (Jan. 4, 2011)

A construct is (1) research-based, (2) its meaning is agreed upon by a consensus of professionals qualified in the appropriate field of study, and (3) it’s quantifiable. All are weak for “effective law departments.”

1. Seven essential practices of personal productivity (Jan. 6, 2011)

A statistical adjustment to improve data. A footnote to a graph in a recent report adds a statistical explanation: “To account for the unbalanced nature of the response rate over time, a regression with a time trend and company fixed-effects was run.” The report is the Litigation Cost Survey of Major Companies, presented at the Searle Center on Law, Regulation, and Economic Growth, (Northwestern Univ. School of Law, May 10-11, 2010) at pg 7. I don’t fully know what it means, but it sounds worthwhile for benchmarking. It sounds like the regression adjusted the data to correct for incomplete data.

Looking back 270 years to lawyers in England. Joel Mokyr, The Enlightened Economy: An Economic History of Britain 1700-1850 (Yale Univ. 2009) at 250: in the early 1730s the total number of lawyers in England and Wales was between 5000 506,000. Approximately 100 years later, in 1841, there were 11,763 “attorneys, solicitors and law students” and another 2103 classified as “barristers and conveyancers.” No mention of Associate General Counsel – Litigation!

D&O premiums as a legal department expense item? Should total legal spending include insurance premiums paid for directors and officers liability? Though I know little about this topic, it seems that most of the protection afforded by the insurance revolves around legal liabilities. If coverage of this type reduces legal fees paid, the premiums ought to count as legal spend.

Twenty industries rankedby “legal efficiency” based on the world’s largest benchmark survey (Dec. 1, 2010)

On lawyers per billion dollars of revenue, legal staff per billion, internal spending as a percentage of revenue, and external spending as a percentage of revenue, I ranked 20 industries by their median benchmarks.

The “first call” is free as part of a major refiguring of ITV’s outside counsel panel (Dec. 5, 2010)

Climbing the Avvo rankings. The Alexa rank of this blog on the legal blog list was Number 106 (Alexa rank of 1,055,886) on January 17, 2011 (See my post of March 9, 2009: number 260 and Alexa 30-day number of 4,316,294; and Dec. 13, 2009: number 161 with an Alexa Rank of 1,550,369 (in the US 859,728).

Fuzzy logic, a more mathematical explanation. Fuzzy set theory, as it is called by mathematicians after Lofti Zadeh developed it in 1965, deals with imprecisely defined sets of numbers. According to Tony Crilly, 50 mathematical ideas you really need to know (Quercus 2007) at 67, “With fuzzy sets there is a gradation of membership and the boundary as to what is in and what is out is left fuzzy.” Similarly, I presume, fuzzy logic as applied to document searching deals with looser concepts and criteria for retrieval than traditional, completely defined Boolean searches (See my March 23, 2006: knowledge management software and fuzzy logic; and April 13, 2009: six methods of search.).

Twiiter reports 344 followers and on 25 lists. Llike Forrest Gump running for his own purposes but accumulating followers, on January 25, 2011 this was my retinue (See my post of April 28, 2009: Twitter and 6 references.). Welcome all!

From a profile of the General Counsel of Silver Lake Technology Management LLC, a private investment firm, I note these points. The Nat’l LJ, Jan. 31, 2011 at 8, mentions that Silver Lake has more than $14 billion under management. For companies that invest in and finance businesses, lawyers per billion dollars of invested assets would be a highly relevant benchmark.

It also notes that Silver Lake employs about 165 people. Its law department of four lawyers and one contract attorney therefore accounts for one lawyer for approximately every 34 employees, which as a benchmark ratio is off the charts. The point is that financing companies are legally intensive.

The third point notes that the General Counsel of Silver Lake, Karen King, is married to the senior director of corporate legal services at Symantec. Now, that’s a family committed to legal department operations!

The law department of Marathon Oil, headed by general counsel Sylvia Kerrigan, enjoys a profile page in Practical Law, Dec. 2010/Jan. 2011 at 96. Embedded in it lurk some blog-worthy topics.

At $53.47 billion in revenues but only 65 lawyers, the ratio of about 1.3 lawyers for every billion would rank close to the bottom on that key benchmark. It makes me wonder whether there are other practicing lawyers in operating units or in countries outside the United States. On the other hand, with 85 other members of the department, the ratio of lawyers to non-lawyers is much less than 1 to 1. So, the department may have fewer lawyers but more paralegals, and thus meet Marathon’s legal needs with a different mix of talent than is usual in US legal departments.

Third, a trivial comment: the article says that the department has an additional “85 legal professionals.” The honorific “professional” suffers when everyone – file clerks, messengers, secretaries – carries the title.

1. Accounting II (See my post of Dec. 27, 2010: more accounting references with 10 references.).

2. Definitions (See my post of July 19, 2009: 11 more definitions with 11 references.).

3. Definitions 8 (See my post of Dec. 6, 2010: 16 definitions with 16 references and 7 metas.).

All this time writing mostly for lawyers, being a lawyer myself, trying to improve management for lawyers, it struck me as ironic that I haven’t drawn on fundamental concepts from the law that might help explain what general counsel deal with as managers. A number of legal precepts apply, and in fact touch on hugely important topics. Consider rights and obligations. A mainstay of all legal systems, these complementary concepts also have significance for law departments, as in the scope of a general counsel’s responsibilities (obligations) and the power to intervene where legal or ethical wrongdoing appears (rights). A law department has an obligation to pay for services dlievered and the right to direct how those services are rendered.

Proximity, intention, negligence, and agreement also serve as building blocks of jurisprudence as well as of law department managers. Blame and praise for performance implicitly accept a proximity framework. Intention undergirds any assessment of someone’s performance if the assessment is not solely outcome based (See my post of Dec. 26, 2010: move away from outcome based evaluations.). Negligence concepts apply to sloppy work as well as to sloppy firms and contractual agreements are the lifeblood of internal lawyers. My point: several of the fundamental concepts of the law also bear on the effective management of lawyers.