Articles Posted in Productivity

Sylvia Nasar describes a remarkable theory and empirical finding by the Nobel Laureate economist, Robert Solow: “Nine-tenths of the doubling in output per worker in the United States between 1909 and 1949 was due neither to the accumulation of physical plant nor to improvements in the health or education of the labor force, but rather to technological progress.” The quote from her book Grand Pursuit: the story of economic genius (Simon & Schuster 2011) at 443 set me on two paths of thought.

One path suggests that productivity increases in law departments have little to do with anything physical (other than computers) or any amount of CLE or professional development, including productivity enhancements such as teamwork. Productivity gains follow from software used better.

The other path my thoughts took were to the definition of technology. We immediately think of computers and software, but Solow’s term might also embrace systems and processes. “Technological progress” could be a broader set of improvements than simply those that depend on silicon chips and software code.

An article in the Acad. Mgt. J., Vol. 53 (2010) at 701-722, analyzes why corporate prominence may lead to a higher incidence of corporate illegality. The authors studied 194 S&P 500 manufacturing firms between 1990 and 1999. They searched databases for references to what they defined as corporate illegality and reviewed the Corporate Crime Reporter for the period. Of the 469 incidents they located for the group – an average of about 47 per year, therefore approximately one out of four companies per year had an incident – they consisted of 162 environmental violations, 96 fraud-related, 124 false claims, and 87 anti-competitive. The article only studied those four kinds of violations.

Perhaps that pace of corporate wrongdoing by manufacturing companies applies more broadly than just to members of the S&P 500. Those categories of criminal activity, maybe with less emphasis on environmental transgressions, could be extended to other industries. In short, this research suggests a data point and even a way to quantify some portion of legal department work – alleged criminal violations and the associated governmental investigations.

It turns out that it may not be at all clear that prospects of change in regulations deter companies from proceeding with their initiatives. Here is how the Economist, Oct. 29, 2011 at 88, summarizes a recent article by a senior Treasury official: “She found no evidence that regulatory uncertainty is holding businesses back from hiring or investment.”

If the unsettled regulatory environment makes no difference to companies, it becomes harder to claim, without empirical support, that the same environment burdens law departments with significant and complex workloads. In the financial industry, everyone assumes, regulatory demands have soared, and perhaps in healthcare. But for large portions of U.S. industry, perhaps the desk-crushing load from governmental rule-making is less than touted (See my post of Aug. 3, 2010: Sox with 19 references and March 28, 2011: costs of regulation and value of law department with 7 references.).

Richard Swenson, a medical doctor, popularized the concept of time margins in the mid-1990s. As described in Benny Tabalujan, ed. Leadership and Management Challenges of In-House Legal Counsel (LexisNexis Australia 2008) at 43, in-house lawyers would moderate some of the pressure on themselves, and be able to get some work done more effectively, if they purposefully created blocks of empty time in their calendars. Buffers of hours let you fit in unexpected calls, think through knotty problems, or simply change gears and recover a bit.

Deliberately unscheduled time, be it 30 minutes a day or a two-hour segment once a week, has benefits something like scheduling meetings for 50 minutes (See my post of Dec. 10, 2009: give yourself time between meetings.).

Major, Lindsey & Africa surveyed inside counsel this spring and released the results in July. One question asked “What percentage of your legal department work is handled by outside counsel?” Almost six out of ten respondents selected “0% – 40%” while two-and-a-half out of ten chose “41% – 60%.”

It is not possible to dig more deeply into these broad bands and combine them, but we might not be far off to guess that something like 80 percent of these legal departments would have chosen 30-50 percent if that band had been available.

Did those surveyed think in terms of budget dollars? If 60 percent of the typical U.S. law department’s budget goes to external counsel, but their effective hourly cost is 50 percent higher than their inside-lawyer fully loaded cost, then the aggregated hours are about the same, inside to outside. Did respondents estimate hours worked on both sides? Did they take into account in any way differences in complexity of work done inside and outside? And, do they articulate or consider any differences in chargeable hour equivalents worked inside and out? Even self-respect might bias responses, since how many law department managers would want to admit that more work is done by those retained than by those hired?

“Increasingly, professional errors – across fields and disciplines – stem not from lack of ability or ignorance, but from ineptitude: situations in which ‘the knowledge exists, yet we fail to apply it correctly.’” In-house counsel should heed this observation, and its follow-on recommendation: use checklists.

Checklists have a “forcing function” that pushes uses to follow the minimum steps in a process. The degree of determination can be like a recipe, in that you follow the steps, or like a picture for a jigsaw puzzle where you can complete the process however you like but you need confirmation of its sufficiency. Checklists can also encourage “pause points” where the lawyer ought to stop and check with other lawyers or clients.

The quote and ideas about two basic functions of checklists comes from Legal Comm. & Rhetoric, Fall 2011 at 96, which quotes from Atul Gawande, The Checklist Manifesto: How to Get Things Right (Metro Bks. 2009) at 8. As to checklists more generally (See my post of Jan. 26, 2010: checklists with 9 references.).

As I wrote recently, a leading provider of contract automation software, Business Integrity, invites legal departments to complete a short online survey (See my post of Oct. 18, 2011: three points regarding contract automation.). Here is the URL.

I looked at the survey and noticed particularly one question: “The following are 5 common reasons for automating contract creation and contract management. How important were these issues to your department when considering implementing some form of contract automation?”

The choices given were:

We constantly hear that change is being forced on law departments because of cost control, technology, and globalization. The third, globalization, looks at the increasing international trade and location of companies and presumes associated complexity or amount of legal services needed.

It turns out, however, that law firms who pursued global expansion most vigorously have lagged their domestic counterparts: “adding more lawyers outside a firm’s home country has generally been associated with modestly slower growth in profits per partner.” That conclusion comes from the Economist, Oct. 15, 2011, at 78, citing The American Lawyer.

It seems plausible to me that if law firms’ didn’t fare so well who they set up camp all over the world, it means law departments – at least in the U.S. and U.K. where the biggest law firms roam – were not demanding cross-border legal services. That might be because the law departments met their needs internally; or it might be because global legal issues represent a much smaller piece of the legal whole than is incessantly asserted.

Among the tools available to in-house attorneys who strive to protect new ideas of employees is defensive publication. An extended discussion of this technique appears in the “Canadian briefings” supplement, at page 5, to the ACC Docket of September 2011. As I understand it, when a company concludes that an innovation is marginally valuable or where “significant naturally-occurring competitive advantages are present,” it might make sense to publish the idea. Doing so creates “prior art” that precludes someone else from obtaining a patent, since patents can only be granted for novel inventions. If someone else has already written about the idea for the public, that prior art denies the later, same idea’s novelty. One more task to consult on and oversee for the inside patent lawyer.

Benny Tabalujan, ed. Leadership and Management Challenges of In-House Legal Counsel (LexisNexis Australia 2008) at 14, refers to a survey by Mahlab Recruitment in 2008. Mahlab announced that Australia’s in-house lawyers worked an average of 50 hours a week. Later, in a chapter by the editor, he cites a 2008 benchmarking study of 125 legal teams in Australia and New Zealand. That report found that around 1 in 4 of those in-house counsel worked more than 50 hours a week (at 34). The two findings do not cover the same ground, but if 25 percent worked more than 50 hours, 75 percent must have worked less so the average is unlikely to be Mahlab’s 50 hours a week.

I am pushing these numbers hard. Still, this does give a rough idea of self-reported hours worked and some of the challenges of reconciling different pools of data (See my post of Sept. 25, 2005: full-time attorneys are generally in their offices between forty-five and fifty hours most weeks; and May 6, 2010: slightly less than half of U.S. respondents reported that on average they work 40-50 hours per week.). The posts on this blog about chargeable hours per year, a figure I use at 1,800 hours in my General Counsel benchmark survey, also suggests less than 50 hours a week