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Insights into how legal departments imitate the practices of other departments

A fascinating article a decade ago, reporting research on the selection of investment bankers, has much to say about legal departments and why they select prominent law firms. Pamela Haunschild and Anne Miner published their article in Admin. Science Quarterly, Vol. 42, Sept. 1997 at 472-500.

The authors distinguish three fundamental bases for how organizations, presumably including legal departments, imitate each other. “With frequency based imitation, organizations execute practices previously used by large numbers of other organizations.” As more legal departments put in place outside counsel guidelines, for example, others followed suit.

“With trait-based imitation, organizations use practices previously used by other organizations with certain traits, such as large size.” An example might be DuPont, which had huge legal spending and a knack for self-promotion, both traits that led other legal departments to imitate its convergence of law firms.

Third, “With outcome-based imitation, organizations imitate practices that that appear to have had good outcomes for other organizations and avoid practices with bad outcomes.” As matter management systems caught on in the late 1980’s, word of mouth (and vendors’ marketing) resulted in widespread imitation of that practice.

The value of the article is what it suggests for why legal departments are followers both in practices and in hiring law firms. Lawyers like precedents; most general counsel like others to blaze trails. I should add that journalists and conference panelists hype innovation so much that general counsel may be forgiven for overlooking both the risks when someone pioneers and the advantages when someone coat-tails (See my post of Oct. 19, 2009: the second-mover advantage.).