Articles Posted in Productivity

In the battle of the forms, a weapon I had not heard about is new software that says it can show where the other side’s contract differs from yours. Its creator, a company called kiiac, claims to help: “Where your task is not preparing the initial contract, but rather reviewing a document prepared by another, use kiiac’s unique capability to create a Reference Standard (based on a market standard or your firm’s best practices) to efficiently review contracts.”

It sounds as if the software identifies portions of text favorable to you that are missing in the contract under review and text that varies materially and adversely from the standard terms and conditions you want included. This resource came to my attention from Law Tech. News, April 2010 at 24.

If the software does what it claims, it could be a powerful and useful tool for a law department that wants to quickly figure out how the other side’s contract terms differ from its own terms.

Ninety-three of the responses to last year’s State of the IP Industry Survey, conducted by CPA Global, were from companies. Of that group, 63 percent were heads of IP or senior managers within the department, while the remainder were general counsel (9%) or “IP support (27%).” Much more important, however, is the distribution of intellectual property they reported. The percentages may not match how in-house lawyers allocate their time, but the numbers convey some aspect of that.

“The average number of IP holdings, including applications, per company that took part is: 12,644 patents, 13,564 designs, 13, 564 trademarks and 12,822 domain names.”

From this fascinating set of benchmark data a clear pattern emerges: an average of very similar numbers of these four important sources of intellectual property value (See my post of Sept. 22, 2005: patents, I thought, were primus inter pares.). I am especially awed by the average number of domain names (See my post of Sept. 27, 2005 #2: tracking domain names should not be a responsibility of the legal department.). Apparently companies buy domain names in many variations for each of their primary trademarks.

Some people argue that productivity gains in companies arise primarily from improved organizational capital: improved management practices and operational processes. That claim rests on the assumption that human capital is roughly equally distributed so a competitive advantage accrues to those who focus on organizational capital. Further, it discounts the benefits to be had from technology (See my post of July 29, 2009: organizational capital in legal departments.) as it subsumes software enhancements in either practices or processes.

An article in Strat.+Bus., Spring 2010 at 88, describes a study of organizational practices. The study asked people at certain companies “a few dozen specific questions” about various practices such as use of incentive pay and investments in training per employee. The researchers found that all the metrics correlated with one another which enabled them to create a single aggregate variable called “organizational capital.” Every company had a rating on organizational capital.

Imagine doing something similar for legal departments. A set of questions about how each legal department handles certain basic practices and processes could generate a rating on organizational capital. Ideally, the rating would correspond statistically to comparative benchmark metrics.

A recent article by my friend Marc Lauritsen, of Capstone Practice Systems marc@capstonepractice.com, discusses “practice system authoring software.” Some people refer to such software as document assembly software, some as automated drafting software, but Marc covers the basics of whatever its appellation. And whatever you call it, it can be productive for legal departments that handle a stream of similar agreements or documents.

Marc also lists six packages that are on the market. I have referred to all of them in at least one post collected in a metapost: HotDocs, DealBuilder, Exari, QShift, Rapidocs, and D3 (See my post of Feb. 26, 2008: document assembly with 16 references.).

Since I last collected my posts on document assembly several more have appeared and I mention two that Marc did not include: WhichDraft and Baseline Solutions (See my post of Aug. 15, 2008: survey results about useful applications from law firms include “automated drafting”; Dec. 9, 2008: benefits of document assembly according to a general counsel; Oct. 19, 2009: a solution to several contract management challenges; Oct. 22, 2009: WhichDraft.com and its application; Oct. 7, 2009: knowledge management and its four key challenges; Feb. 19, 2009: Latham & Watkins’ Capture program; Jan. 10, 2010: legal department has contract assembly database; March 11, 2010: Baseline Solutions.).

A presenter at a conference shared his company’s emphasis on the use of “plain English” in the drafting of contracts and other documents. The general counsel itemized his company’s basic rules of contract drafting:

1. No embedded definitions
2. Keep definitions in the same place and be sure they make sense

The worth of academic psychology studies varies widely, but when I read that “people in a bad mood performed tasks better than those in a good mood” I hardly cheered up. My basic style is cheerful; life is full and good. But as revealed in Sci. Am. Mind, March/April 2010 at 12, “grumpy people paid closer attention to details, showed less gullibility, were less prone to errors of judgment and formed higher-quality, persuasive arguments than their happy counterparts.” Curmudgeons rule! Presumably, therefore, in-house lawyers with frowns, Eeyores of the department who are fluent in kvetch, turn out better work product and give more astute counsel.

Tell me it ain’t so, Joe? It’s sad, if true, that were less bad, if blue.

An article about King & Spalding’s 150-person Discovery Center describes the history and attributes of that Center. They use project attorneys and staff attorneys for document review. But what stood out for me was a sentence about the productivity returns from big screens.

I appreciate data that supports claims, so it made my quant heart jump to read that “widescreen flat-panel LCD monitors further contribute to a significant improvement in our attorney review rates – the equivalent of adding 1.5 reviewers to a 10-person project at no additional cost.” That is a fifteen percent gain in throughput.

Reviewing documents is not what in-house lawyers do for hours at a time, but I have to believe that large screens, or double monitors, enable lawyers to spend more time doing and less time mousing (See my post of Sept. 30, 2009: monitors with 6 references.). The article is in Met. Corp. Counsel, Feb. 2010 at 9.

Matter management systems lack the capability to judge the importance of a matter. Fees alone don’t determine a matter’s strategic importance or legal depth. More specifically, the burn rate on a matter may indicate some measure of its legal intensity, but not enough (See my post of May 3, 2009: burn rates of outside counsel with 6 references.). Perhaps the number of partners billing to a matter, normalized for the length of a matter, could serve as a rough proxy of complexity, the assumption being that more partners bring more specialized perspectives.

The illustriousness of the firm handling the matter makes for a very ambiguous indicator of the matter’s importance. Type of matter is far too crude a categorization. Some antitrust advice has little strategic importance; one employee asserting a modest wage/hour claim may explode into millions of dollars of liability.

Yes, you can ask lawyers to rank their own matters on complexity and value, but it’s like 4H club members judging their own watermelons. Even if you give them a scale and do several other things to help assure some consistency and fairness, it is still subjective and self-serving. And, it is not the matter management system that is doing the evaluation.

“In 1988, we had approximately 55,000 law firms (sic) producing 2% of our country’s gross domestic product. Twenty years on we had approximately 130,000 lawyers producing that same 2%.” This confusing quote comes from Law Bus. Rev., Winter 2009 at 54 with data from the United Kingdom, where I assume the 55,000 figure refers to lawyers, not law firms.

The stability of revenue share argues against a dramatic increase in legal complexity over the two decades because the share of national wealth produced by lawyers stayed about the same relative to other sectors (See my post of March 13, 2007: complexity with 4 references; and Dec. 27, 2008: complexity of legal practice with 20 references.).

If the legal system had convoluted to become much more complicated or demanding, more societal resources would have had to flow to it.

A recent book extols checklists as a commonsense way to help us manage the complexity of our activities. A reviewer, writing in the NY Times Bk. Rev., Jan. 24, 2010 at 7, says that the author argues that in many tasks failure “results not so much from ignorance (not knowing enough about what works) as from ineptitude (not properly applying what we know works).”

This insight surely applies to lawyers, whether in-house or in firms: everyone needs to get the basic stuff right, at the least, and a checklist pushes us to make sure. If the payment was more than 90 days before the bankruptcy filing, are we sure it was a preference? More, a checklist can “foster the communication required to deal with the unexpected.” Those who use them have a framework around which to discuss a problem.

The book makes the point that checklists save us from ineptitude especially in relatively straightforward processes, but even very complex legal transactions consist of some number of simpler sub-processes. Lawyers, like the doctors discussed in the book, may believe their profession is as much an art as a science, untouchable by simplistic check-offs, but it is highly likely that more diagnostic and memory aids would improve the quality, increase the speed, and reduce the costs of legal services (See my post of Aug. 27, 2005: model litigation audit checklist; Aug. 31, 2005: Schering-Plough checklist for employment contracts; Oct. 4, 2005: checklist for reviewing bills; Dec. 20, 2005: checklist of what clients need to gather before calling; April 13, 2006: give clients checklists of legal issues to consider; April 22, 2007: audit-committee checklist; Jan. 21, 2009: value-indicator checklist; Feb. 14, 2009: demand management checklist at Royal Bank of Canada; and Dec. 21, 2009: risk management checklist.).