Articles Posted in Productivity

Among the candidates for a service that lawyers can do but shouldn’t, what I call quasi-legal work, would be negotiation. When a company needs to hammer out the terms of a contract, an acquisition agreement or a joint venture, of course there will be legal issues involved; but fundamentally the decisions and how they are reached are commercial trade-offs that ought to be made by a business person.

In many companies, however, lawyers are skilled in negotiation and are asked to do so. Too often time-consuming and stressful negotiations take away from the time of lawyers to do more valuable work.

“According to a survey of 2,500 middle managers in the USA conducted by Business Week magazine, legal departments were perceived as containing some of their company’s least competitive employees. Embarrassingly, only the strategy and research departments scored worse, mainly perhaps because no-one really knows what they do.” LSI Newsletter: Ed. 30, Sept. 2006 newsletter@laurencesimons.com

I read this tidbit and furrowed my brow. Does it mean that lawyers do not compete with each other? Or does it mean that lawyers are next to last in their perceived ability to help a company compete? Is aggression and testosterone absent from litigation managers and their colleagues? Might it mean that law departments lag in weeding out underperformers? Just what does this oddity mean, if it has any meaning at all?

Laws and statutes bountifully apply to grants of options and restricted stock, legalities govern when insiders and executives may exercise their holdings, and someone who knows the law must tend to the securities acts reporting of both.

But most of the tracking and the preparation of Form 4s and Section 16 filings demands far more administrative discipline than legal analysis or interpretation. For that reason, lawyers should be involved only if a question arises and should not be responsible for the rest of the mundane activities (See my post of Sept. 21, 2005 on quasi-legal activities and my article .).

The term “commodity legal work” has much plasticity (See my posts about commodity legal work of Dec. 5, 2005 on the reversal of the pyramid, so commodity legal services go to outside counsel; Oct. 5, 2005 on the likely shift of it to offshore providers; March 13, 2006 with its definition of “low stakes matters”; Nov. 8, 2005 that defines it as “process or process oriented”; and Aug. 16, 2006 on commodity work handled inside, challenging work outside.). It also is used in a pejorative sense, yet much legal work for any company falls within its ambit.

Work that is a commodity toss off to a veteran lawyer is a perplexing challenge to a novice. A transaction that is bread and butter to one law firm may be pâté and caviar to another. If tens of millions of dollars ride on the legal outcome it’s “bet-the-company”; if pennies are at stake, we mutter “commodity.” Or a legal issue that Company A has never faced may be one that Company B deals with every day.

Each of these four dimensions gives shape to a definition of the amorphous term “commodity.” What is deemed commodity work depends on frequency, complexity and risk – on both the law firm and law department sides. Those who manage law departments and partners who serve them ought to think a moment about what they mean by the term, and whether their hearer shares the same understanding.

A columnist for Fast Company, Sept. 2006 at 103, bade his farewell with a piece on conversation. Important as healthy conversations are, as crucial as they are to every aspect of managing and working in a law department, genuine conversations face many impediments

Among the obstacles, Dr. Kerry Sulkowicz includes the jungle of formal corporate processes that mostly keep employees from really communicating. He castigates Blackberries and e-mails that substitute for talking. The pace of work, concerns about litigation, and lack of practice cause tongues to be tied.

He suggests three practices that law department managers should make their own. Trust your curiosity. When you talk with someone, ask questions to understand them. On the other hand, know when to keep your mouth shut. The more you know and learn about the other person, the better the conversation. And, third, listen without passing reflexive moral judgment on what you hear or without prematurely charging into action mode. Better conversations, better law departments.

A sacred cow for sizeable law departments is the committee/team. “We need to improve our system to archive old files: let’s appoint a group of six people that will meet every week and recommend improvements!” The amount of advice on how to unleash a productive team would stagger any of us, and I don’t propose to rehash it (See my post of Jan. 4, 2006 about virtual teams; Jan. 30, 2006 about Blue Cross teams.

I propose instead to attack the whole notion that group decision-making brings optimal results (See my post of April 27, 2005 with seven causes of team breakdown.). My experience is that an individual, one solitary person, inevitably has to make important calls. That person may benefit from input from others, but generally speaking large swathes of committee time drain away ineffectually.

Committees hobble because they exponentially raise scheduling difficulties; members do not know their roles and often don’t step up to responsibilities; expectations of consensus bog down even small decisions and cripple daring ones; hours of words go by without any conclusion, and then the unrecorded conclusions are dug up again and the horse beaten even more; laggard performers can draft in behind the more capable; and often the blind lead the blind. Vitriolic, perhaps, and not politically correct, but I have deep reservations about most law-department project teams.

An issue of the Nat. L.J. in August 2006 at 8 profiled the general counsel of Mary Kay. Three points caught my eye, two that refer to prior posts on this blog and the headline point. The general counsel, one Mr. Moore, additionally oversees government relations (See my post of Aug. 8, 2006 on this sometimes responsibility of GCs.) and “executive support.” That’s a new one, whatever “executive support” is! The other tidbit brings to mind core competencies (See my post of Aug. 9, 2006 on this nebulous notion.): “International intellectual property law is a staff specialty.”

More important, “Of the 12 attorneys on staff [in the law department], four are foreign-born and half command a language besides English.” Since Mary Kay does business in 30 countries, the cosmopolitanism of its law departments is fitting (See my post of April 27, 2005 about Kodak Europe and its dual- language requirement.).

The factoid suggests that skin color and national origin probably matter less from a business standpoint than understanding different cultures and speaking fluently in languages in addition to your company’s primary language (See my post of Aug. 13, 2006 on symmetrical expectations of diversity between inside and outside lawyers.).

Robert Half Legal commissioned a survey and reported its findings based on “150 lawyers from among the largest corporations in the United States and Canada.”

The survey asked the in-house lawyers, whose levels are not identified, “Of the following, which would you say is your legal department’s single greatest business challenge today?” The pie chart shows the results: “increased workloads” (34% chose this challenge), “compliance or regulation issues” (28% chose it), “controlling litigation or outside counsel costs” (24%), “budget restrictions” (7%), “employment issues such as hiring, retention or maintaining morale” (6%) and “other/don’t know” (1%).

Workload is a function of other pressures, such as pressing legal and regulatory demands or the need to manage lawsuits or an inability to find funds to hire more staff. Similarly, talent issues in-house tend to be a function of piled high inboxes and miniscule compensation increases. So what this small survey really says is that “there’s a lot of law out there pressing down on us and it costs a lot if we go to outside firms to help us.” Our business challenge – as compared, I guess, to our management challenges or our ethical challenges? – are tons of demands for knowledgeable, and often expensive, lawyers. Right.

According to Richard A. Posner, Public Intellectuals: A Study of Decline (Harvard University Press 2001) at 151, “the optimal number of errors is not zero but is a number derived from minimizing the sum of error costs and error-avoidance costs.” An error cost might be a default judgment entered for $50,000 because no answer was filed, while the error-avoidance cost might be a full-time paralegal for $70,000 a year to keep track of complaints served and docket entries. The match of cost to cost is imperfect, but the point should serve. Law departments should strive to minimize both costs, not single-mindedly focus on the error costs.

The worse the consequences, in other words, the more we should invest in their avoidance, but we should not invest every dime in prevention. That policy is folly (See my post of Jan. 24, 2006 that it’s cheaper to fix a localized disaster than prevent all of them.).

Two problems with error detection are that it is selectively enforced (only some people’s errors are unmasked) and it is often not clear who made the “mistake.” Aside from those weaknesses, no sane law department should even strive to be error-free nor should it hold out as its goal to prevent legal problems within its company. Economics are against it. Plus, it is unproductive, infuriating to clients and, being unattainable, hard on staff morale.

How a law department handles contract drafting and reviewing has undeniable importance. Importance, but not all-determinative because you need to look at what happens regarding contracts before they reach the law department as well as after the law department finishes its stint.

At the starting point, some clients use master agreements and addenda. Others use purchase orders. Still others negotiate most of the terms themselves or make due with simple agreements. Every policy and practice from the client’s end reverberates through the law department.

At the other end, after the law department has sprinkled fairy dust on a contract, wide variation exists in how contracts are executed, stored, tracked, and retrieved (See my posts in 2006 of May 5 with its several links; June 7 on Billiton and its policy; June 19 on GE and DuPont; and June 16 on Cisco.). To look at the final steps of a contract’s lifecycle is to do an end-to-end efficiency study.