All law departments have warts. Some, to be sure, are more unsightly or even destructive than others. If management problems are bad enough, the department might become in some aspects dysfunctional. A few but by no means all of the management malfunctions I have witnessed and written about are noted below in alphabetical order.
Overboard competition among lawyers (See my post of Oct. 10, 2005.).
Harassment, discrimination or bullying (See my post of Jan. 19, 2008: bullying.).
A speaker at a recent session urged the law department attendees not to have litigation lawyers in their departments who only direct outside counsel (See my post of Aug. 21, 2005 regarding not hiring a head of litigation.). His belief is that those lawyers need to know how to do what litigators do and keep their hand in to be skilled at directing law firm litigators. Like generals command better who know first hand what the grunts are facing, someone who doesn’t prepare motions, take and defend depositions, and review documents, will atrophy those skills and will lose both credibility and judgment.
The point is arguable, because a litigator who both manages and gets her hands dirty may find it hard to balance the two during crunch times. Also not everyone is equally good at both kinds of tasks. The lawyer may not take a strategic view of the litigation portfolio if tactical demands force themselves on her. Her caseload may have to drop and it may be a constant challenge to integrate with a law firm if you are co-counsel (See my posts of May 31, 2005 on Canadian case loads; and Oct. 27, 2005 with US data.).
Benchmark data tells us that the tipping point for having a full-time administrator is around 10 to 15 lawyers. In that range, more departments have an administrator than do not have one (See my posts of April 8, 2005 on replacing an administrator with rotating lawyers; Aug. 1, 2006 on various titles for the position; and Oct. 1, 2006 on this metric.).
To my surprise then, I heard of a law and compliance department with more than 400 people that has no administrator. Instead, this very large group relies on a finance person assigned to the law department, and an HR person also assigned (See my posts of Nov. 8, 2005 on the contributions of HR reps; and Dec. 2, 2007 about the Time Warner Cable example.). I do not know about the status of IT support. The general counsel explained that there is no chief operating officer or administrator for the department. The same held true for the law department of Oracle which has almost 100 lawyers.
It is hard for me to understand why such large groups do not feel it worthwhile to have a person in charge of infrastructure and legal operations (See my post of Feb. 7, 2008 on infrastructure.).
This blog is flush with posts that touch on law department productivity. Productivity has to do with how much output results from a given amount of input (See my post of April 27, 2006 on 20 economic terms.). For our purposes, it is a measure of how efficiently a law department turns out advice and work product with a fixed set of resources. If three in-house lawyers can handle all the legal needs of a billion-dollar company and stay within normal bounds of total legal spending, they are productive.
Capacity, by contrast, has to do with total output (See my post of March 26, 2006 for other economic concepts applicable to law-department management.). In other words, any law department can increase its capacity by hiring more law firms or adding more law department staff. Productivity, however, would decline as capacity rises (See my post of May 16, 2007 on law firms and their presumed capacity.). No matter how much capacity comes online, a company can absorb more (See my post of Dec. 12, 2006 on the unquenchable needs of companies for legal guidance.).
Every law department or corporate-secretary function can establish how many corporate entities they maintain around the world. Both can determine, at least approximately, the costs in time – at fully-loaded hourly rates – and other expenses – such as the fees of corporate services companies or specialized software (See my post of April 22, 2007 for comments on specialized software for the function.). Those costs of entity maintenance divided by the number of entities generates a benchmark metric: cost per entity maintained.
Such a metric has not come to my attention and I would welcome hearing from readers any guidance on ranges for it. Come to think of it, I do not know a median number of corporate entities per billion dollars of revenue, or the drivers of that number by industry or company size. Most tellingly, is the benchmark meaningful? Can you do something to alter it? After all, to paraphrase Oscar Wilde’s quip, you can know the benchmark for everything, but the importance of nothing.
Companies have prevailing norms, systems of social control that define appropriate attitudes and behaviors for all employees (See my post of Dec. 17, 2007 for the difference between culture and norms.). As but two examples, do executives have parking privileges; is child care provided?
Law departments inhale the norms of the company they serve (See my post of June 11, 2007 on equity and equality norms.). They also develop swarms of norms (See my post of Jan. 8, 2008 on ethnography.).
Do people work on weekends (See my posts of Nov. 9, 2006 on skiving; and Sept. 22, 2006 on perceptions that law departments are nadirs of competitiveness.)? Do lawyers take all their vacation hours (See my post of June 30, 2007 workaholics.)? Are the halls and offices of the law departments quiet at 6PM?
Have you ever tried this question with your clients who ask you to do work that drains your time from more pressing tasks or tasks that they or others should do: “If we charged you $200 an hour for our time, would you ask us to do it?” It could be that the rates vary according to the likelihood of legal risk (See my post of Oct. 22, 2006 on inside lawyers with multiple rates.).
This approach means you charge internal time only for particular, pre-defined services. Inside lawyers, for example, might charge for time spent on quasi-legal services (See my posts of Sept. 10, 2005 and its discussion of such tasks; July 21, 2005 with definitions; and Feb. 23, 2006 on how to identify them.).
Commodity work, such as reviews of ordinary advertisements, might deserve an hourly chargeback. If there is so much of it, clients should have an incentive to handle the easy stuff or standardize much of what is needed.
A piece in Bus. Law Today, Vol. 17, Jan./Feb. 2008 at 23, lists 25 “potential disasters” in a table. Other columns of the table encourage planners to use a scale from 0 to 9 to rate the probability of each one striking, the magnitude of the disruption it would cause, and its geographic scope. With the total score in hand for each type of disaster, planners can focus on those with the worst consequences.
Law department lawyers might be involved as a team member in enterprise-wide disaster planning (See my posts of Aug. 28, 2006 on business continuity plans regarding what to do if a catastrophe occurs; and May 13, 2007 about one advantage to being a decentralized law department; Nov. 10, 2007 on crisis response.). Whether or not they are, their managers should look ahead to how the legal department would respond to massive disruption by nature, human wrong-doing, or internal upset (See my post of Oct. 10, 2005 on politics and succession planning.).
MIT Sloan Mgt. Rev., Vol. 49, Winter 2007 at 5, has an article about how a company should prudently allocate its IT resources. Law departments do not fare well as recipients of those scarce resources. The author, a Unisys executive, proposes that companies should segment their technology support customers, and that two factors should dominate in that segmentation: “how close the function is to daily revenue and its need for real-time information.” Law departments fall low on both counts. Many regard them as a profit center (See my post of Dec. 17, 2007.) and law departments do not need data provided instantaneously.
A second reason is that a law department is small. Programming time and other technology assistance doesn’t make much sense for a relatively modest group of people. Exacerbating its small size, several law department applications are useful only to a subset of those small groups (See my post of March 31, 2007 on law-department specific software.). A few law departments might even rebuff IT assistance if the lawyers are worried about attorney-client privilege or breaches of confidentiality.
At a law department where I have done some work, several of the lawyers have two monitors in front of them. They can keep one or more documents open on one and their email and web searches on another, for example. As the price of monitors declines and lawyers facility with software increases, the availability of large, flat-screen monitors at affordable prices may help with productivity (See my post of April 23, 2006 on ergonomic considerations.).
At the same department, many people work in cubicles or shared offices and wear headphones as they work. The headphones block out some of the ambient noise and allow the lawyers and paralegals to concentrate. On the other hand, traditionalists and opponents of telecommuting might not like it that workers are listening to music (See my post of Dec. 17, 2007 about artwork in law departments.).
Law Department Management Blog