Articles Posted in Productivity

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Ironically, what lawyers in companies view as commodity, routine work – just another contract, yet again a lease, here we go with another non-disclosure agreement, the fifth agreement of this kind this week – embodies in fact the life blood of the company. Every day the company buys what it needs, produces what it can, and sells as much as possible. All those quotidian transactions need to take place as smoothly as possible and with legal work kept to a minimum. A fair amount of the “legal” work takes occurs without a lawyer and without a hitch; most of the rest is plain vanilla, legal blocking and tackling.

What lawyers are drawn to are legal issues peripheral to the business’ operations, indeed the legal issues that business managers wish would not arise: the lawsuit, government investigation, patent infringement claim, sale of a division, issuance of stock, or termination of an employee.

The closer to the business the legal work is, therefore, the more urgent the need to create standard processes and to streamline commodity legal work, if do any legal work at all. Farther away from the heart of the business are the specialized legal problems that create frisson for the lawyer, but no joy for the executive.

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A wonderful idea found its way to the innovators issue of InsideCounsel, Sept. 2006 at 65. BMO Financial, a unit of the Bank of Montreal, originally created a legal intranet site in the mid-1990s. Traffic on the site by internal clients of the unit was not as large as some in the law department thought it should be. So, Dougal Clark, BMO’s chief counsel who began the site, innovated.

He asked an in-house group, those who handle cash management services, “for permission to build a ‘legal corner’ on their Intranet site that offers information relevant to their line of business and links back to the legal Intranet site.” Permission granted, the mini-site appeared soon afterward and the idea of “legal corners” spread to the web sites of virtually every line of business within BMO.

The primary legal site now attracts 1,000 unique visitors every month (See my posts of March 27, 2005 on artificial intelligence software made available on an intranet, July 21, 2005 about a law department posting its manual and other material, and Sept. 10, 2005 about charging for help if the answers are on the intranet.).

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Were law departments and law firms to have a commonly accepted definition of a complex law suit (or transactional work, for that matter), it would be easier to develop different approaches to valuing the legal services, charging for them, setting incentives, assessing performance, staffing them, and investing in technology for them. The benefits of a quantitative standard are easy to describe; a framework for assessing the legal complexity of a particular is, however, gnarly.

In September 2006, the Empirical Legal Studies blog, hosted a discussion about how to measure case complexity. The scholars who weighed in acknowledged how difficult it is to devise parameters of complexity. They offered (1) the number of legal issues, (2) issues arising under certain notorious statutes, such as ERISA, the tax code, patent and railroad preemption, (3) intertwinement of multiple statutes and issues, (4) “labyrinthal factual situations,” and (5) the number of docket entries or pages of documents produced (See my posts of May 15, 2005 on complexity of legal services; June 28, 2005 on the topic generally; Aug. 27, 2005 on litigation complexity; and Feb. 16, 2006 on tax issue complexity.).

What’s needed is a broad-based coalition of firms and departments, something like the one that devised the Uniform Task Based Management System of codes, to wrestle with objective and subjective measures of legal complexity.

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“In mid-2003 one in ten Internet users had registered at a social network, and one in five had visited such a network.” This quote comes from John Battelle, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture (Penguin Group 2005) at 308, FN 6. Over the next five years or so, social network software will set in train a number of far-reaching effects for law departments.

Social network sites, such as LinkedIn, will allow specialists within law departments to keep in close contact with others who practice in their legal field. They will readily ask questions of each other, find and contribute resources, and organize discussions on arcane but useful topics.

It is an entrepreneurial opportunity awaiting someone to establish a legal social network site (Lex SocNet, for sure) that combines all these tools of knowledge exchange. Law firms with strong practice groups will fund them. As social network software becomes easier to use and even more powerful, and mostly as more and more people find it as natural to use as search engines, organizations that cater to in-house counsel, such as ACC, will be hard-pressed to justify their membership fees.

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E. Norman Veasey and Christine T. Di Guglielmo, in “The Tensions, Stresses, and Professional Responsibilities of the Lawyer for the Corporation,” Bus. Lawyer, Vol. 62, Nov. 2006 at 1, discuss compartmentalization and decentralization of legal departments (at 33).

The authors introduced a new idea for me: compartmentalization of legal work. The authors look askance at practice:

“The administrative decisions to spread legal work in discrete units over a large group of different lawyers and firms (compartmentalization) should focus on whether or not add to what extent this practice may inhibit the lawyers’ ability to identify issues and solve them will bring them to the attention of the appropriate corporate agents. An individual lawyer or team of lawyers that is assigned a single piece of the complex deal may not know enough about the transaction’s overall structure to recognize problems.”

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One of the most intractable issues in the management of in-house lawyers concerns the line between their rendering legal advice and their rendering business advice. That divide, which may be an omelet that can’t be reversed to eggs, implicates client expectations of in-house counsel, attorney-client privilege, workloads, training and professional development, and the basic orientation of the department to how it adds value.

Metrics on this issue, therefore are most welcome. E. Norman Veasey and Christine T. Di Guglielmo, in the Bus. Lawyer, Vol. 62, Nov. 2006 at 27, cite a study by Professor Vincent Alexander in the late 1980s. Alexander found that “47.8% of outside counsel and 46.7% of in-house counsel said that they give business advice frequently” (at footnote 92). I can’t think of any reason why those percentages would change appreciably two decades later, so there is at least one metrical baseline for how commonly corporate lawyers take a position on business grounds.

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According to Corp. Counsel, Vol. 13, Dec. 2006 at 80, among the 62 lawyers and 14 paralegals in Exelon’s law department, half of them worked on pro bono projects in 2005 and logged in all more than 800 hours. That averages approximately 20 hours per person.

Exelon’s “participation rate tops that 50% pledge goal set in 2006 by the Washington-D.C.-based Pro Bono Institute.” Not all the time goes to legal representation; some is closer to community service (See my post of Feb. 11, 2007 on the distinction and some further references.). Some projects are group efforts, like one known as Lawyers in the Classroom. Other projects sustain individual interests, such as to pitch in for the Philadelphia Volunteer Lawyers for the Arts.

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Other items have commented on Indian providers of off-shore law-related services (See my posts of June 15, 2005, which mentions Imaging & Abstract International; Nov. 14, 2005, which mentions Xania; and Jan. 6, 2006, which provides more detail on the report referred to here.). A report, issued in late 2005, profiles 15 vendors: ALMT Systems; Atlas Legal Research; Comat; IndiaLegal.net; Integreon; Intellevate India; Lexadigm Solutions; Manthan Services; Mindcrest; NewGalexy (sic); Pangea3 (See my post of Jan. 28, 2007, on it and Lumen Legal.); Prolifus; Quislex; Variante Global; and Verist Research.

I checked most of them and they at least have a web presence. Meanwhile, I also found material from the Legal Support Global Group (a division of Goodsoft Inc.), which provides offshore “legal and paralegal support in such areas as “contract review and monitoring, contract drafting, document review for due diligence, patent drafting, simple filings, legal research,” and “litigation support.” The disclaimer at the bottom of page three of the Group’s website notes that “We are not a law firm and we do not provide legal advice.”

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Jeffrey Pfeffer and Robert I. Sutton, Hard Facts, Dangerous Half-Truths & Total Nonsense: Profiting from Evidence-Based Management (Harvard Bus. School Press 2006) at 110-111 make the point that trying to increase a person’s motivation – say, with the carrot of a large bonus if some goal is achieved – can’t improve ability, only effort. Compensation schemes will fail if they “presume greater effort will bolster performance – without system redesign, information sharing, or upgrading people’s skills.” Just trying harder won’t make much difference.

Dangling money at the end of the year doesn’t have the targeted effectiveness general counsel want if the lawyers who chase the rabbit do so with no better training, tools or systems (See my posts of Jan. 20, 2006 on mandatory CLE; May 10, 2005 on reimbursement of CLE expenses; and May 1, 2005 on the obligation to disseminate CLE training.). Bonuses alone might push a lawyer to work harder, but not smarter.

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In a retrospective spanning 1981 to 2006, Canadian Lawyer Inhouse, Vol. 2, Feb. 2007 at 7, found that during that 25-year span, “the number of lawyers employed in the corporate sector has tripled.” The study did not include government lawyers or lawyers of Canadian corporations hired outside of Canada. Rising from 1,125 to 3,329 lawyers, that increase amounts to a compounded annual growth rate of roughly 4.3 percent (See my post of Nov. 26, 2006 for a riveting frolic through the delights of CAGR.). What amazed me is that the expansion in-house almost doubled the expansion in the number of Canadian lawyers in private practice (2.2 percent).

It is possible that in the US the same relative growth rates hold true – law departments added lawyers faster than law firms and solo practitioners added to their numbers – but the explanation may be that during those two decades law departments were coming into their own and staffing up (See my post of Sept. 10, 2005 on relative growth of US firms and departments.).

It also took me aback that “Canada’s five biggest banks alone employ about 10 percent of the lawyers who work in corporations.” That would not be true in the US; insurance firms might hold a similar dominant position in terms of numbers of lawyers.