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Road blocks that prevent law departments from becoming more closely aligned with business units

As reported in CounseltoCounsel, Nov. 2006 at 9, a survey by LexisNexis Martindale-Hubble/Altman Weil asked the respondents – 138 law departments – to choose among seven obstacles to closer alignment between them and their clients. The respondents could choose more than one of the obstacles (See my post of Dec. 20, 2005 that criticizes such a survey methodology.). The results follow, by increasing percentages of respondents who chose them, and then some comments:

A. “Business units are resistant to using outside counsel we suggest.” (6%)

B. “The law department is not organizationally aligned with the client organization.” (10.3%)

C. “Other” (14.5%)

D. “We are perceived as deal breakers rather than deal makers.” (20.5%)

E. “Geographically dispersed locations make it difficult.” (27.4%)

F. “We are perceived as a road block – ‘Don’t send it to Legal; it takes too much time.’” (33.3%)

G. “The law department is brought into the picture too late – at the 11th hour.” (75.2%)

As to A, if clients and inside lawyers were more simpatico, presumably clients would trust the decisions of the lawyers to retain external counsel, would trust the quality of the firms chosen, and would accept the additional costs passed through to them. Shatter any of those confidences and alignment suffers.

With B, the explanation for misalignment might be that the department has not assigned a lawyer to be chiefly responsible for each major business unit (See my post of Oct. 14, 2006 on SPOCs – single points of contact; March 23, 2006 on SPOCs at PPG Industries; and March 17, 2007 on disadvantages.). This obstacle overlaps with geographic dispersion (E), which is also a structural issue.

D and F at first seem repetitive, but D goes to risk aversion while F goes to slowness (See my posts of April 12, 2006 on risk aversion and personality styles; Jan. 16, 2006 on the principal-agent aspect of risk aversion; Oct. 18, 2005 generally on lawyer on risk aversion; and Dec. 17, 2006 on Type I and II errors.). Both warts are savaged in most client satisfaction surveys. The deeper point is that “alignment,” a term not defined, appears to loosely cover whatever clients don’t like about law departments. I use the term “alignment” more in terms of whether a law department’s organization matches the organizational model of its client.

To conclude, G follows from all the preceding choices: cost concerns and confidence in judgment, an organizationally orthogonal structure, as well as conservativism and tardiness of lawyers. Clients put off the unpleasant necessity (See my post of March 20, 2007 on the inevitable price of dealing with the legal team.) until moments before midnight.

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