Articles Posted in Productivity

The talent literature cites as gospel that “there’s a huge gap between the business results that average employees deliver and what stars deliver,” NY Times, April 23, 2006 at C3. According to Thomas A. Davenport, Thinking for A Living: How to Get Better Performance and Results from Knowledge Workers (Harvard Bus. School Press, 2005) at 145, “80 percent of the work is done by 20 percent of the people.” (See my post of Sept. 4, 2005 on other applications of Pareto’s 80/20 theory.).

An evaluation system that early on picks out high-potential lawyers (See my post of May 14, 2005 on executive development courses for them.) should pay off handsomely. Not that pure talent decides who’s a Lawyer of Steel (See my post of July 14, 2005 on four dimensions of success.), but if this view holds true – that the rare star makes a huge difference in a law department – then every effort should be devoted to hire, retain, challenge and make the best use of superlative talent.

One ubiquitous term in law department management circles is “productivity.” As typically used, “productivity” assumes that value results from the task. To sharpen 400 pencils in four hours may be high output level, but it is not “productive.” “Productivity” also assumes some level of commendable quality. A lawyer who proofs 400 pages in a day, but 50 typos and errors slip through, is not “productive.” The term also assumes that the productive person is using his or her abilities efficiently for their level. To address 400 envelopes in a day may be productive for a secretary, but not for a general counsel.

Fourth, a period of comparable time is assumed; to write three appellate briefs sounds impressive, but not if it takes eight months. Finally, implicit in the definition of “productivity” are metrics, some countable aspect.

Thus, for law department managers the immanent characteristics of “productivity” are a quantifiable amount of worthwhile services accomplished well by the right level in an appropriate period of time (See my posts on productivity of Dec. 3, 2005 on 30; May 7, 2006 on semantic network software; May 17, 2006 on technology; June 6, 2006 on Honeywell’s initiatives; and July 5, 2006 on the Horndal effect.) .

Nestled among the initial offerings by the Law Society of Scotland’s web-based training are modules on stress management and “diffusing conflict through communication.” The piece (Legal Week, July 13, 2006 at 25) that mentions these offerings amidst modules mostly on substantive legal areas made no further comment. But I will.

Of all management skills needed by in-house counsel, are stress and conflict management the most important? Would the lawyers who toil in law departments pick courses on those topics over courses on accounting, strategic planning, delegation, time management, or procurement techniques, just to pick several that strike me as more integral to success? Clients must be making life tough for counselors.

Interviewed in a recent article, Met. Corp. Counsel, July 2006, at 30, the Vice President, Legal Operations Administration for Sara Lee’s legal department, declared her view of one dividing line. “The lawyers can focus on legal issues and the operations person or team can focus on business issues.” (See my post of Aug. 1, 2006 on definitions for this senior management position.). Business management is yet another term for what administrators should handle. This covers, for example, the process by which invoices are reviewed and paid, but does not trespass into evaluations of law firms or the direction of what they should work on.

I think senior lawyers in law departments need to be involved, heavily, in the management and operations of their department. The line between substantive legal work and law-department management may look bright, but it should be permeable.

No doubt, the operational functions of a law department benefit from the oversight of someone whose job it is to make sure that the trains run on time. That said, there still remain many decisions about how to manage the department that should not be abdicated by managerial lawyers. Whom do we hire, and fire; where do we handle work inside as compared to outside; how should bonuses be distributed and which law firms are appropriate for us to use? These decisions sound in law not in operations

Ever since an economist named Ronald Coase first publicized the idea, economists have recognized that companies tend to do work internally whenever doing it externally would cost more or where the transaction costs of coordinating with outside counsel are high (See my posts of Aug. 14, 2005 about the transaction costs of transferring lawsuits and Feb. 18, 2006 about fixed inside costs and variable outside costs.).

This economic doctrine of transaction costs applies to law departments. By the use of in-house counsel, who presumably cost less per hour than outside counsel, the company benefits as to both cost, control and quality assurance (See my post of March 26, 2006 on 14 other economic concepts.). I have often said that about $450,000 a year of foreseeable payments to outside counsel in an area of law justifies hiring a lawyer. Another instance: One of the claimed benefits from convergence is lower transaction costs as firms and departments become more familiar with each other.

What law department managers call knowledge, economists call non-rival goods. As explained in David Warsh, Knowledge and the Wealth of Nations: A Story of Economic Discovery (Norton 2006 at xvii), economists also refer to ideas and concepts as “nonconvexities.”

Non-rival goods can be employed simultaneously by any number of law departments. Rival goods can be consumed by only one person or department at a time. A law department expert on anti-trust is a rival good, available only to that law department; a law department that understands competitive bidding possesses a non-rival good, in that such knowledge can be employed by many departments simultaneously. A core competency ought to be a non-rival good.

It is a hassle for a corporate secretary’s staff to photocopy and assemble hefty board books for Board meetings and then distribute them to members of the Board. The chore is aggravating, prone to error, under deadlines, and low-level.

Several software packages streamline this chore by allowing a law department to post the materials on a secure online site (See my post of Jan. 24, 2006 for other corporate-secretary software.). Directors can download the documents they need and print them out. This capability not only alleviates the logistical nightmare of manual distribution but also allows the department more time to prepare the materials. The software also serves as a repository for directors so that they can look back and find earlier material easily. Software for these purposes, such as Endexx, Aprio, and BoardVantage, also has other functions such as expense tracking, calendaring and voting.

As described in an interview of the legal manager of a Polish subsidiary of SABMiller, “this document describes how the company can assume financial liability. It consists of tables that define the type of obligation, various levels of functions and the maximum liability involved.”

According to the interview, in CounseltoCounsel, July 2006 at 7, the authority levels of different executives in the company are all laid out. Even more, software that handles contracts for the company (See my post of July 14, 2006 on that software.) displays the SPP rules automatically.

A CounseltoCounsel, July 2006 at 7 interview of the legal manager of a Polish subsidiary of SABMiller describes that legal department’s contract handling system.

The key individual is the Contract Originator (CO). “The CO works from a cover sheet submitted by the requesting manager; shares the submitted information with appropriate authorizing parties for budget, tax and legal authorization; sends the hard copy of the contract and a cover sheet to appropriate managers for final signatures; and forwards signed copies to the company’s internal service center for scanning.”

I have already taken the position that the law department should not be the shepherd for contracts. That service is quasi-legal work.

Large law departments (See my post of June 27, 2006 on relative sizes of law departments.), beneficiaries of division of labor, specialization, scale, and investment in technology, have the wind at their back. They have more lawyers and paralegals, so they can assign work that better matches a person’s skills. They have streams of similar work so those who do it become more expert (See my posts of Sept. 10, 2005 on specialist attorneys in large law departments.). They have the funds to invest in process improvements, knowledge management, software development and licenses.

For these reasons previous posts (See my posts of May 4, 2005 on TLS as a percentage of revenue declining as revenue increases; and Aug. 5, 2005 about quality of firms matched to the size of company; April 7, 2006 on procurement’s need for some economies of scale.) comment about the favorable winds in the sails of large departments.

What isn’t acknowledged as much is that big departments also face head winds. Big departments can be becalmed by infestations of procedures, the bluster of hierarchy, cross-currents from internal audit and compliance, drift wood that can clog offices for years, and waves of bureaucracy. Doldrums is too strong a word, but the huge ships that are large departments sometimes take a lot of wind and sail to move.