Articles Posted in Productivity

A number of previous posts have discussed Six Sigma (See my post of May 3, 2006 #2 and references cited.). According to General Electric and a piece on it in Corp. Counsel, Vol. 14, Jan. 2007 at 61, Six Sigma focuses on consistency in processes. A variation of Six Sigma is Lean Sigma, which focuses on waste and inefficiency in processes (See my post of Nov. 14, 2005 about Lean Sigma at Xerox.).

When GE’s Aircraft Engines division law department assembled a team to apply Lean Sigma methodology, the team identified 117 tasks for improvement. One of them involved contract processes at the division (See my post of Jan. 14, 2007 on this team’s innovations for contracts.). More specifically, during a weeklong meeting clients and in-house lawyers filled walls with sticky notes and slew many dragons of wastefulness. Among other lessons the “action workout group” learned was that the contracts were too long; they slashed their form contract to a quarter of its former length.

Top-posters reply to a message above the original text; bottom-posters, the opposite. Interleavers reply within the original text; while copiers pick out what they want to reply to and copy it above their response. Law departments may become accustomed to one style or another, usually one that is in accord with the style of the senior lawyer.

The preceding distinctions came from the Fin. Times, Oct. 4, 2006 at 8, which also offers a rule of thumb. “If you are beginning your third or fourth meaty paragraph, consider a white paper … or at least a phone call.”

My personal peeve is with excessive reliance on e-mail, especially long ones that require me to scavenger hunt for the key point or question. Forwarders should delete the extraneous stuff from long chains of messages. Far better: pick up the phone and call!

When lawyers make judgments under uncertainty, they can make two general types of errors — false positives (Type I errors) and false negatives (Type II errors). A false positive claims to find something that isn’t there, such as deliberate manipulation of option pricing when actually only sloppiness was at fault. A false negative fails to find something that is there: no discrimination in a termination when in fact there was blatant racism.

No decision maker can simultaneously minimize both types of errors because decreasing the likelihood of one necessarily increases the likelihood of the other. Furthermore, the costs of these two types of errors are rarely symmetrical. So, in theory, law departments should build systems and train lawyers so that they are biased toward making the less costly errors. This bias might increase overall error rates, but it minimizes overall cost.

Setting aside the technical talk, this distinction suggests that inside lawyers are better off making Type I errors. It is better for one’s career to spot legal issues even if they are not genuine or serious (a Type I error) rather than let a legal blunder slip by (a Type II error). Now we can better understand the law department’s tendency toward risk aversion and conservativism.

During a recent conference, I learned of a law department that uses software called Omniware. As described by a senior lawyer in that department, this contract management database tracks the status of contracts, assembles first drafts of common contracts, aggregates knowledge about bulk purchases, and has a suite of reporting capabilities.

Over the next five years it seems plausible that that matter management systems will absorb more and more of these kinds of contract management functions. That ingestion is similar to how matter management systems will incorporate document assembly capabilities (See my posts of March 24, 2005 doubting the spread of such software and Aug. 31, 2005 about Schering-Plough Canada and its use; and Jan. 16, 2006 about McDonald’s use of it.).

The platform of matter management systems will graft on other capabilities (See my post of Aug. 21, 2005 on e-billing and matter management software; Aug. 9, 2006 on the merger of corporate secretary and board software systems; and Oct. 1, 2006 on a board package that has absorbed many functions.).

I have speculated several times about why it is that the larger the company the lower the total legal spend as a percentage of revenue. Candidates to explain this established metric in favor of larger departments include greater specialization of lawyers; more investments in technology; the services of better law firms or lawyers within the firms (See my post of Aug. 5, 2005 about A-team assignments.); legal intimidation of smaller companies (See my post of May 4, 2005 regarding patent lawsuits.); more flexibility and precision in assignments; better educated clients (See my post of Oct. 2, 2006 about mature companies in mature industries.); and older, more experienced lawyers (See my post of March 16, 2006.).

If legal talent is not evenly distributed among law departments, but instead gravitates toward larger departments, there might be additional reasons. Possibly larger companies are able to recruit and keep more qualified in-house counsel because of their higher pay, more generous stock options, or richer benefits packages; possibly its broader career choices, national reputations as brand names, or improved in-house training.

A smidgeon of data would go a long way to help us understand whether lawyers should create their own documents or dictate the first draft. The clarity and resounding persuasiveness of “it depends” just doesn’t answer the question. Nor does a survey of law firms in October 2005 by the Esquire Group help, although it prompted me to write this.

Both methods fare better, to be sure, if the lawyer types or dictates competently. Typing does not rely on someone else, unlike dictation which might be to a person (See my post of March 17, 2006 on higher pay to stenos than to digital equipment transcribers.). But there are other dictation choices, too, such as CyberSecretary or voice recognition software (See my post of Aug. 26, 2005 on this software as a chimera.). New digital dictation software makes that choice even handier.

According to Law Dept. Quarterly, Sept.-Nov. 2006 at 45, for a full-time lawyer in the Aviva legal team the “ideal” would be “1320 hours of chargeable time a year.” Mary Ward, the head of legal operations for the 90 lawyer group, observes that “actual figures are frequently higher.”

Indeed. The usual estimate in US law departments for the number of chargeable hours worked by in-house counsel is 1,850 (See my posts of Sept. 25, 2005 about using 1,850 chargeable hours as a proxy; Oct. 18, 2005 on how to calculate your figure; Nov. 16, 2005 on uses of the internal cost per hour; and Sept. 5, 2005 on European law departments at about $220 an hour.).

A lower chargeable-hour estimate makes a huge difference in per-hour costs. If a 10 lawyer department averages inside costs of $500,000 per lawyer, then at 1,850 chargeable hours each lawyer costs the company $270 an hour. At the Aviva figure of 1,350 chargeable hours, each lawyer costs the company $370 an hour. The US standard figure is 37 percent higher than the Aviva ideal figure, which drives up the cost per lawyer hour by 37 percent.

Each year the legal team at Carrillion, the $8 billion UK building company, hosts a “legal network meeting.” Attending it are the 20-some in-house lawyers, the company’sw main external advisers, and senior internal clients — in all around 160 people.

“Its purpose is to cover issues highlighting what the business is all about — normally the CEO or other senior management will speak at it,” reports Law Dept. Quarterly, Vol. 2, Sept./Nov. 2006 at 40. An ambitious and progressive idea, to unite the three legs of the legal stool: company lawyers, their law firm partners, and the clients who draw on both of them for legal advice.

On the legal team of Carillion, an $8 billion British infrastructure, building and business services company, many of its lawyers who advise business units sit physically with the unit. According to Richard Tapp, group company secretary and general counsel, in an interview in Law Dept. Quarterly, Vol. 2, Sept. /Nov. 2006 at 39, co-location best balances various considerations (See my posts of Feb. 5, 2006 and Feb. 12, 2006 about proximity of lawyers on the same floor of a law department; and July 31, 2005 about general counsel who have their offices near their lawyers.).

Put simply, it is good for the lawyers to have offices near each other, but it joins them closer to their clients if they are in proximity to them (See my posts of June 7, 2006 on dueling best practices about contiguous lawyers; May 1, 2005 about the percentage of lawyers at “headquarters” and legal spend; and Nov. 25, 2005 on the locations of corporate counsel.).

I avidly read Lucy Kellaway (Fin. Times), so when her headline mentioned “cyber-skiving” I had to research the term. Skive is British slang for avoiding work by staying away or leaving early; it’s often heard in the form skive off. The term may have appeared in World War I when British troops in France borrowed it from the French esquiver, to slink away. Cyber-skiving is wasting time online, such as reading blogs.

Now we have the proper term for the dead wood, the derelict, the dreamer, the Free-Cell addict, the clock watcher, the blog grazer – skivers all.