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Rees Morrison’s Morsels #99 – additions to earlier posts and short takes

Honored to be on a list of top ten legal blogs. James Dunning, a former UK general counsel, selected Law Department Management for his recent list of top ten legal blogs, calling it “a detailed and frequently updated blog from Rees Morrison for in-house legal teams.”

Twitter and its tracking of mentions on Twitter. Every several days I spend five minutes on Twitter and dash off tweets about writing this blog. It is fun to sit back and say “What have I learned recently about blogging or thought about?” Then, I stumbled upon the Twitter capability that when you click on yourself on the right margin – I am @ReesMorrison and welcome followers, you see mentions of yourself by other Tweeters. I have had 15 and didn’t even know it!

A change in the rate of change – the second derivative. Mathematicians call a slowing down or speeding up of some rate of change a “second derivative.” The first is the rate of change, such as the billing rates of law firms or the number of lawsuits filed against a company. The second derivative is an alteration in the pace of the underlying first rate of change. If a general counsel tracks fluctuations in a benchmark over time, such as total legal spending per lawyer, then even if the absolute amount spent does not drop in a year, the rate of increase might drop: a modest triumph and a derivative to feel proud of (See my post of March 23, 2007: moments in statistics to describe different measures of variance.).

Confounding variables and research in law department operations. A confounding variable is something that makes a difference in a cause-and-effect situation you are studying other than the variable you want to focus on. For example, if you study the effect size of goal setting in law departments, meaning how much goals influence behavior, a confounding variable would be monetary incentives. This caution, from the Academy of Mgt. Perspectives, Vol. 23, Feb. 2009 at 18-19, means that good data analysis identifies confounding variables and corrects for them.

Possible denominators for law department benchmarks. An article the Academy of Mgt. Perspectives, Vol. 23, Feb. 2009 at 74, observes that “CEO compensation scholars assessed firm performance using Tobin’s Q; adjusted and unadjusted measures of ROA [return on assets], ROE [return on equity], and ROI [return on investment]; shareholder returns; earnings per share; market-to-book ratios; and price-to-earnings ratios.” The particular article uses size-and industry adjusted historical stock prices as its measure of firm performance. Law department benchmarks might make use of any of these financial measures as denominators, such as total legal spend per ROA (See my post of July 2, 2007: market capitalization.).