Articles Posted in Tools

Increased outsourcing of “decision analysis” is one of the breakthrough ideas for 2009 in Harv. Bus. Rev., Vol. 86, Feb. 2009 at 38. The authors predict that third-party providers will “structure decision alternatives, analyze data, and recommend or even take courses of action.” They give as examples assistance in significant issues, such as deciding where to build new stores, set insurance premiums, deploy salespeople and offer promotions.

It is not too farfetched to anticipate decision analysis for law departments in such areas as settlement practices, patenting patterns, choice of outside counsel, analysis of costs of matters handled by outside counsel, and development of knowledge management resources such as process guidelines and aids. Several offshore firms specialize in decision analysis, such as Mu Sigma, MarketRX, and Inductis, according to the article, and other offshore vendors (Cognizant, TCS and Infosys) “are beginning to develop an expertise in decision making.” Here is an opportunity for collective involvement by several law departments who could combine their data for an analytical exercise.

What decision analysts for law departments will need to do is to combine data, knowledge of in-house practices, visualization tools, and analytic disciplines. They should also subscribe to a ratio of something like the “4-1-1” staffing approach as outlined in the article. Four offshore analytic consultants, one consultant at the law department, and one senior lawyer in the law department would make up the team.

While on vacation, and musing over my 20-year career consulting to general counsel, I nominate these ten management changes as the most significant. For the sake of the hot-stove league, I have ranked them in declining order of importance. Go ahead, e-mail me your critiques and your nominees!

1. Financial accountability expected of general counsel, such as budgets, periodic reporting on expenses, benchmarking, management of outside counsel, and the incursions of the procurement function
2. Buyer-vendor relations with outside counsel, where some are viewed more as transactional vendors and value for money has become a common refrain (See also convergence and financial accountability)

Many managers who believe in some practice find it almost impossible to imagine that another manager, equally smart and experienced, disdains that process and advocates the opposite. It is true, nevertheless, that defensible arguments lodge against every practice, that someone can devise reasons why any practice ought to prevail or perish (See my post of Feb. 6, 2007: all processes have pluses and minuses; Aug. 28, 2005: trade-offs with all practices; and Dec. 17, 2006: practices have warts.).

Consider 15 posts where I offer pros and cons of that many practices:

Assemble virtual teams of external firms or rely on one (See my post of Nov. 6, 2006: advantages of virtual teams in a crisis.).

Having previously gathered my posts that recommend how to do something, in fact 44 somethings, I realized I have not updated that collection since Dec. 3, 2007 (See my post of Nov. 27, 2007: how-to’s with 23 references; and Dec. 3, 2007: how-to’s with 21 references.).

In the intervening 16 months, almost a dozen posts have offered ideas on many topics, including the following how-to’s (See my post of Jan. 3, 2008: organize yourself; Feb. 16, 2008: reach better decisions; March 5, 2008: improve organization charts; March 25, 2008: obtain better budgets from law firms; May 21, 2008: learn from a specialist lawyer if you are a generalist; Aug. 13, 2008: conduct a panel review; Aug. 15, 2008: compete work through a bidding process; Aug. 15, 2008: cut litigation costs in half; Sept. 3, 2008: conduct effective interviews; Nov. 21, 2008: deal with change; and Feb. 6, 2009: use e-mail more effectively.).

I have skewered “best practices” many times, yet haven’t pulled together all my arguments against them (See my post of March 4, 2008: three thoughts against best practices.). My list of counterpoints now numbers seven.

You can’t duplicate the context of someone else’s practice. All law department practices are embedded in a rich, intermingled context, such that someone else who tries to adopt it cannot really follow suit. If, for instance, you copy how another legal department assigns work, how can you also absorb that company’s circumstances of legal talent, business model, and use of outside counsel (See my post of Nov. 11, 2007: complex contexts; and Nov. 27, 2007: best practices ride roughshod on context.)?

All practices have pros and cons. Trade-offs and opportunity costs lurk everywhere, so it is not possible to proclaim a practice as best (See my post of Feb. 6, 2007: all processes have pros and cons, so no best practices.). For example, many general counsel advocate programs for high potential lawyers, but downsides to those programs exist (See my post of July 29, 2007: high potentials with 10 references.). Many general counsel think that moderate competition among reports is good, but others reject that view (See my post of Oct. 2, 2008: competitiveness with 29 references.).

Samuel Johnson’s Dictionary of the English Language (1755) “marked a revolution in English letters by being descriptive rather than prescriptive.” Unlike the efforts of the Académie Française to fix meanings and pronunciations of French words, Johnson’s different goal was to describe the state of English as it was spoken then and in the past.

Reading this in the Wilson Quarterly, Vol. 33, Winter 2009 at 93, I felt my own tension about “best practices.” Readers want this blog to be prescriptive – “Tell me what I should do regarding a management issue I face” – but I favor being descriptive – this is what other general counsel are doing or have done.

As a consultant to general counsel, I certainly hold myself out as fully capable to advise any law department on what it should do from its own situation. Those specific recommendations differ hugely from blanket statements about prescriptive “best practices” or “trends.” Most people assume that to identify a “trend” is to proclaim a best practice in the early stages (See my post of Jan. 2, 2009: the pathology of trends fabricates best practices.). I do not agree that trends – even if reliably spotted – presage best practices.

Having introduced my set-cost offerings for benchmarking projects and for unlimited phone calls, I recently added a third for law department retreats (See my post of Feb. 25, 2009: benchmarking; Feb. 26, 2009: phone calls; and March 8, 2009: retreats).

This fourth offering, again on a fixed rate, is to do client satisfaction surveys. Depending on a couple of parameters, the fee will be established within the range of $11,000 to $21,000. The two parameters are the number of clients you invite to participate and the number of questions you would like to ask in the survey. For further details, please meander over to my website page.

Is there a way to compare whether Company A in telecommunications is better than Company B in energy on lawyers per billion of revenue? A reports a benchmark figure of 8.2 while B reports 5.6, but the industries have very different profiles of lawyers per billion (See my post of Feb. 25, 2009: lawyers per billion with 22 references and one metapost.).

Yes, there is a way to compare then when you state their benchmark metrics in terms of standard deviations within their respective industries.

Let me explain. Assume you have benchmark data on lawyers per billion of revenue from a goodly number of law departments in telecommunications and in energy. If those industry metrics distribute themselves normally – think bell curve – standard deviations can describe how far Company A and Company B are from their respective industry norms. The norm is typically either the median or the mean of the data set (See my post of June 30, 2006: descriptions of dispersion of data.). In a normal distribution bell curve, approximately 66 percent of the data points fall within one standard deviation on either side of the norm. Approximately another 30 percent fall within two standard deviations.

An earlier post explains how law departments can describe their management initiatives by combinations of two attributes portrayed on a scatter-gram (See my post of March 11, 2009: management initiatives on double axes.). Mere description of attributes has limited value to general counsel, however, so we need a way to correlate various attributes to changes in costs or productivity related to them.

If the descriptive metrics on mentoring, to take one example, are compared to inside spending per lawyer a year or two later – after enough time for the mentoring program to have had an opportunity to yield benefits, we will be closer to saying that mentoring programs deliver or do not deliver a return on investment (See my post of Feb. 26, 2009: introduction to descriptive metrics.). With enough data from law departments, we can calculate the degree of correlation.

The first level of information is a relationship between two attributes as visualized on a scatter-gram. The correlation of that figure to another figures, such as internal spend per lawyer, is a derivative (See my post of Feb. 12, 2008: why correlations are insightful.). With sufficient data from law departments, this analytic approach has much potential.

We can describe management initiatives in law departments by various attributes, picking two at a time, and depict the intersection as a scatter-gram. Take mentoring programs. Two ways to describe a program would be duration and investment. In one law department the mentoring program has been underway for 36 months and costs less than $500 per attorney per year. Another department, just starting out with formal mentoring, is 6 months into it and spends $1,000 per attorney per year. An X-Y chart locates them as two different points.

Another pair of descriptive metrics might be “hours spent per lawyer per month” versus “number of participants as a percentage of all lawyers.” One department’s mentoring program might result in its lawyers devoting a half hour a month and 40 percent of the lawyers take part. Another department might average less than a quarter hour monthly but have a 60 percent participation rate. Again, someone could plot such a pair of attributes on a chart. Other metrics are possible and the permutations of depicting them on a scatter-gram are multiple.

The resulting scatter-grams will disclose patterns as well as benchmark metrics (See my post of Jan. 14, 2007: log-log scales; June 6, 2006: scatter-plots let you see patterns; and March 11, 2009: correlations of attributes of initiatives.).