Articles Posted in Productivity

Intangible assets – trademarks, patents, proprietary processes, among others – account for approximately two-thirds of the total assets of U.S. public companies, according to an article in Met. Corp. Counsel, Vol. 16, May 2008 at 18. The article even provides a formula to estimate the value of intangibles of a firm [Q]: the intangible value equals the difference when you subtract from 1 the result of 1 divided by its total market value [MV] divided by its book value [BV]. That is Q = 1-1/(MV/BV). For example, if a company has a market value of $100 million and book value of $25 million, its intangible value is 75 percent.

Why, then, isn’t intellectual property — its development, protection and transactions – not a core competency of nearly every company (See my post of May 23, 2008: 12 references cited to core competencies.)? Why are patents viewed ambivalently in terms of legal expense (See my post of May 23, 2007: strategically invaluable, yet prosecution often a tactical commodity.).

Other posts have discussed definitions of core competencies in law departments (See my post of May 23, 2008.) and some consequences of deciding on those competencies (See my post of May 23, 2008.). To complete a triptych of posts, let’s think about one other perspective: Is any specialist lawyer a core-competency lawyer?

Litigation should not be privileged because the unblemished, well-run company will confront little of it.

Employment law is mostly counseling and litigation rather than anything to do with developing talent in a company, so it is not a core competency. Companies hardly yearn for tough HR legal issues.

A previous post offers four definitions of core competencies for law departments (See my post of May 23, 2008.). What difference do the definitions make? Many, I submit.

First, however, a comment on legal-team size. Is it possible for small law departments, say those with two-to-five lawyers, to nurture core competencies as much as larger departments might? No, not as likely. When there are only a few lawyers, they are likely to be generalists. Even so, small departments too ought to gravitate toward some basis for deciding their priorities and building their skills.

Services de-emphasized. If a core competency is a strategic decision to press the pedal on some areas of law, then a law department logically ought to throttle back its efforts in other areas. Some brakes include triage, de minimis standards for what the department will handle, assigning low priority to certain work, self-help by clients, clients and law departments turning more to outside counsel, and delegation. Decisions regarding non-core activities help define the role of the law department and go far to shape client satisfaction with the law department.

A scattering of posts discuss the general notion of core competencies as applied to law departments (See my posts of May 14, 2005: Bain’s survey of management tools and June 9, 2007: a more recent Bain survey.). A couple offer specific instances (See my posts of Sept. 21, 2005: a brand company’s legal focus; Feb. 8, 2006: British real property; and March 13, 2006: Philip Morris.).

What hasn’t been done is to define fully what the term “core competency” means (See my posts of March 15, 2006: descriptions of core competencies; July 31, 2006: core competencies are non-rival goods; and Aug. 9, 2006: some peripheral thoughts.).

Fundamentally; the notion is that when limited resources face unlimited requests for assistance, law departments ought to focus on a subset of services and do them very well (See my post of Aug. 5, 2007: clash between core-competency and full-service.). Law departments should not strive to be full-service shops. General counsel might agree with that proposition, but they ought to ponder four possible definitions internal-legal core competencies.

Research at various manufacturers has shown that as production doubles, the hours required to make something falls by a fairly consistent percentage, on the order of 10 to 30 percent. As volume builds, workers become more productive. Edward Russell-Walling, 50 Management ideas your really need to know (Quercus) at 80, discusses the experience curve theory, but doesn’t explicitly apply it to a service context.

Still, it makes sense that increased experience increases efficiency. Other posts have alluded to the plausibility of an experience curve for law department attorneys who handle a number of transactions of a similar kind (See my posts of Nov. 6, 2006: delegate to go up the efficiency curve; May 31, 2006: the sigmoid curve of management initiatives; Feb. 2, 2008: specialist billers at law firms and learning curves; Oct. 10, 2006: core competencies and skill curves; and July 15, 2006 and June 20, 2007 # 1: Horndal effect of increasing productivity.).

We may not know how to measure the output of a contracts lawyer, but it makes intuitive sense that if that lawyer does twice as many more of a kind of contract, the time required to do the average one in that second batch drops by 10-30 percent.

A press release, dated March 14, 2008, for two groups, the Australian Corporate Lawyers Association (ACLA) and Corporate Lawyers Association of New Zealand (CLANZ), covers their Legal Department Benchmarking Report 2008. The release contains a statement about the top issue facing legal department leaders. “Workload/time pressure is the number one issue.” The claim set me to ruminating.

The quote conflates two notions. “Workload” could be sheer volume, a consistent high level of work to be done but none of it exigent. “Time pressure” could be manageable amounts of work, but chronic crises and last-minute pressures. The first is amount; the second is urgency and the two combined leave the analyst confounded.

It is not my consistent impression that inside counsel face epidemics of being rushed (“time pressure”) nor that they are typically overburdened with demands on them (“workload”). So, I ruminated on.

The more able your clients are to resolve legal issues, the more your law department can turn its attention to the most challenging and valuable legal tasks. Common names for the constellation of efforts to increase the legal capabilities of clients – client training, provision of resources such as templates and guidelines, empowerment and recognition, and client willingness – are self-service and self-help.

Many law departments have energetically engaged in this reversion of responsibility (See my posts of Sept. 14, 2005: Cisco’s self-service tools; April 13, 2006: Disney’s efforts; May 14, 2006: Intuit’s website; March 11, 2007: Kraft’s joint venture material; and Dec. 6, 2007: Sapient’s offshore contracts.).

Other posts have offered complementary insights (See my posts of Feb. 16, 2006: citation to my article on the topic; Feb. 7, 2008: track client usage of intranet documents; June 28, 2006: client training.)

Good lawyers are good typists. Too bold a claim? If you lack keyboard proficiency, your productivity relative to your peers will lag.

Critics – Luddites actually – used to suggest that expensive lawyers spent too much time typing and formatting their documents. You don’t hear that complaint much any more. Bear in mind that it is expensive to hire and keep competent administrative assistants. Furthermore, the ratio of admins to lawyers is steadily declining in law departments.

Today, where so much information flies around by email and floats in the computing cloud, where we spend so much time before monitors, it has to be true that touch typing at a good and accurate rate is an asset. You are how you type.

“When correctly implemented, e-billing actually changes the way attorneys and support staff do business. Call it business process reengineering brought down to the legal department.” This optimistic claim comes from Corp. Counsel, Vol. 15, May 2008 at 75.

Certainly, members of the legal staff do different things with respect to invoices once they have e-billing software. But not every modification of behavior deserves renown and praise as business process reengineering. The hyperbole that surrounds software that “transforms the practice of law” usually turns out to be marketing exaggeration. It is enough that software improves the productivity of those in law departments who use it.

Brad Smith, a columnist for InsideCounsel who in his spare time helps out Microsoft as its general counsel, asks this question in InsideCounsel, May 2008 at 8. He notes that in his company more than 1,500 employees maintain blogs [how does Smith know that ?] but he doesn’t out any of his lawyers who blog.

True, as Smith points out, this is a “media-and Internet-dominated age.” And needless to say I have a soft spot in my heart for blawgs. If anyone would love to see a legal department host a blog, I would, but as a consultant on legal department management, I think I would counsel a would-be pioneer department to let that idea lapse.