Articles Posted in Productivity

Corp. Counsel, June 2010 at 76, tells us that Microsoft, with more than 450 lawyers, had unwittingly proliferated 1,836 different kinds of contracts. To hack away at that profusion its legal department “launched a new centralized contract tool last year [2009], slashing the number of contract templates to 212.”

Impressive as this simplification of the contract palette may be, massive additional benefits were foreseen. “That should save the department 45,000 hours and up to $1.4 million a year.” At $32 an hour, the dollars saved are not the value of the 45,000 hours put to better use but something additional, such as database costs, retention charges, temporary works, or otherwise.

It is good housekeeping to clear out varieties of standard contracts and settle on fewer, but better and more used, templates.

We learn from Corp. Counsel, June 2010 at 81, that Hewlett-Packard’s law department is retaking most of its patent prosecution work in-house. Two years ago, only 32 HP patents were prosecuted internally; in 2009 the company handled 350 in-house and its goal for 2010 is 600 (See my post of Aug. 17, 2010: Xerox uses outside counsel for its patent work.). HP may have taken advantage of softness in the hiring market to strengthen its internal capabilities.

The General Counsel is referred to as saying that “the lawyers doing the in-house prosecution work are happier and more focused, and the costs are lower than sending it all outside.” I imagine “happier and more focused” means they are more engaged than outside lawyers. I wonder if the inside lawyers have quotas?

The ability to bring work in-house en masse is a privilege of larger law departments. HP offers a good example of economies of scale. It is also a good example of the weakness of lawyers per billion of revenue. Clearly, when HP is fully staffed with a cadre of patent scriveners that benchmark ratio will rise but if they are more cost-efficient than external counsel its total legal spending as a percentage of revenue should fall.

We learn from Corp. Counsel, June 2010 at 81, that Hewlett-Packard’s law department is retaking most of its patent prosecution work in-house. Two years ago, only 32 HP patents were prosecuted internally; in 2009 the company handled 350 in-house and its goal for 2010 is 600 (See my post of Aug. 17, 2010: Xerox uses outside counsel for its patent work.). HP may have taken advantage of softness in the hiring market to strengthen its internal capabilities.

The General Counsel is referred to as saying that “the lawyers doing the in-house prosecution work are happier and more focused, and the costs are lower than sending it all outside.” I imagine “happier and more focused” means they are more engaged than outside lawyers. I wonder if the inside lawyers have quotas?

The ability to bring work in-house en masse is a privilege of larger law departments. HP offers a good example of economies of scale. It is also a good example of the weakness of lawyers per billion of revenue. Clearly, when HP is fully staffed with a cadre of patent scriveners that benchmark ratio will rise but if they are more cost-efficient than external counsel its total legal spending as a percentage of revenue should fall.

A meaty article in the ACC Docket, May 2010 at 75, details how the litigation group at Textron has put Six Sigma techniques to work. Textron’s initiative aims at “promoting continuous improvement by using specific training, processes and tools.” Several points jumped out at me as I read the article.

The discipline requires a substantial commitment of time. For example, early on the group held a three-day session with key internal customers to obtain feedback. Three days is an eternity, an enormous commitment of time by everyone.

Second, Six Sigma pushed the litigation group to define its “key value streams,” which are “the areas in which we primarily provide value to our internal customers.” Among the 10 that are listed, seven are what you might expect from a litigation group but three are unusual: records retention, manage corporate security program, and crisis management/medical.

Management researchers have identified both motivational barriers and knowledge barriers to knowledge transfer. Within a law department of some size, the motivational barriers show up as competitive responses between senior lawyers, lack of economic incentives, resistance to change, and turf protection. In addition to these motivational obstacles, an article in the Acad. Mgt. J., Oct. 2003 at 680, describes what its authors call knowledge barriers. “Examples of knowledge barriers are the recipient’s level of knowledge prior to the transfer, the recipient’s ability to shed prior practices, and the pre-existing social ties between the source and the recipient.”

In other words, one lawyer who knows nothing about wikis can absorb a wiki’s advantages. Another lawyer loves Excel and can’t give it up for Access, and a lawyer readily experiments with something a friend finds useful.

A good example of delegation and pushing in-house lawyers to add the most value comes from Corp. Counsel, June 2010 at 79. During 2009, Discover Financial Services, with 34 in-house lawyers, executed 700 business technology agreements and about 100 facilities agreements. To get something like four agreements done per workday, the department set up an interesting model. “Nonlawayer contract specialists in the finance department collect a deal’s requirements from the business unit, prepare a first draft, manage the review process, and highlight any issues for the legal department.”

This is a powerful model: empower and educate client specialists to handle as much as they can and use the legal department to train and prepare them, then resolve difficult or novel issues. If this model of client paralegals spreads, it will change outside counsel usage (since more in-house time will be available to do work previously sent out or to manage instructions more closely), open up opportunities for offshoring services (since work at this level will flow to lower cost regions), and alter staff counts (with an effect on benchmark statistics).

“Processes are collections of activities that, taken together, produce outputs for customers” (See my post of July 13, 2008: processes pulled together with 26 references.).

This broad definition comes from the Acad. Mgt. Rev., April 2003, at 240. Continuing, it adds that “Process management entails three main practices: mapping processes, improving processes, and adhering to systems of improved processes.” I have written about process mapping (See my post of April 9, 2009 #2: process maps with 6 references.) as well as about process improvements (See my post of July 31, 2009: process improvements with 3 references and 5 metaposts.).

Two other points from the quote deserve mention. “Among other things, process improvement involves streamlining the handoffs between processes.” This step looks at inputs from clients and quasi-legal groups (See my post of Sept. 3, 2008: typical oversight areas of legal departments; July 31, 2009: garnishment; and Oct. 16, 2009: legalistic units.) and the entire, end-to-end process. For example, what happens to a contract after legal reviews it?

“The observation that unit costs tend to decline at a uniform rate with experience is ubiquitous in the organizational and economic literatures.” What the Acad. Mgt. Rev., Dec. 2005 at 1159, is refers to is called in the management literature as “organizational learning curves.” The concept certainly holds true in law departments. The more you see of a certain kind of legal issues, the faster you can resolve them. The larger the law department, the more issues of a similar kind present themselves and therefore supposedly the steadier the improvements in productivity and effectiveness.

This concept seems to be different than specialization, It suggests that the Horndahl effect comes from process improvements, not just refined knowledge about an area of law (specialization). A specialist focuses narrowly and may well see more instances of any particular issue than a generalist, but may also spend much time on relatively unusual occurrences. Someone handling relatively routine problems day in and day builds a different understanding and effectiveness than would a highly-trained specialist with a variety of arcane matters. Breadth and depth of unusual knowledge has a different learning effect than knowledge from repetition and volume. It is the difference between five years of experience and one year of experience repeated five times.

Absorbtive capacity is much discussed in the management literature, as well as in the Acad. Mgt. Rev., Dec. 2005, at 999. Absorbtive capacity “Refers to the ability of organizations and their units to recognize new external knowledge, assimilate it, and apply it to commercial ends.”

For a law department, it refers to how easily its personnel spot ideas from conferences, articles, consultants, or its own efforts and then makes use of them. Is the department a sponge for new ideas or a raincoat that sheds new ideas?

“The ability of units to absorb new external knowledge depends on the levels of prior related knowledge.” This suggests to me yet another advantage of larger law departments: there are more hooks of familiarity to attach onto new ideas and help them grow. For example, a larger department may have a newsletter or a wiki. It is more likely to have cross-functional work teams and may hold learning conferences for its internal staff and external counsel. More of its members may belong to external groups or professional networks.

Several points struck me from an article in Wired, Aug. 2010 at 132, about occupational stress. The most striking is that the higher your position, the less damage stress does to you. The reason for this seeming paradox is that the higher you rise the relatively more control you have over your pace, pressure, and priorities. For that reason, a general counsel has to make tough calls under time pressure and never with enough information, but that general counsel has some say over what’s on the desk and how to handle it. The mid-level lawyer in a department has less control and therefore more stress.

The article also points out some possible misunderstandings about stress reduction. One is that “blood alcohol levels above 0.1 percent – most states consider 0.08 the legal limit for driving – trigger a large release of stress hormones.” Several stiff ones at night exacerbate the angst. Also, exercise can help alleviate feeling stressed out, but not if you don’t want to exercise in the first place. Meditation, studies show, can dramatically reduce levels of stress and anxiety. Finally, learn to walk away from provocations; we actually have more control than we think over what sets us off (See my post of May 18, 2007: stress and pressure with 7 references; and June 11, 2008: stress with 18 references.).

I lashed myself unsparingly to update my posts on stress and now feel deeply relieved that I have done so (See my post of Nov. 17, 2008: procrastination increases stress; Dec. 7, 2008: dogs at work reduce stress; Jan. 30, 2009: cortisol, released under stress, harms memory; Feb. 22, 2009: vacations relieve the grind; Dec. 10, 2009: leave more time between meetings; Dec. 10, 2009: vexations of air travel; March 11, 2010: pressure levels between big and little legal departments; June 17, 2010: bureaucracy can reduce stress; and July 19, 2010: decision-making under time constraints.).