Articles Posted in Productivity

A profile of General Mills’ top lawyer, Rick Palmore, refers to the significant amount of time his 50-lawyer team spends on checking advertisements and other marketing materials. The three-page profile is in SuperLawyers, Bus. Ed. 2011 at 221.

The decision whether a claim made for a cereal or other product will hold up to challenge, from competitors and regulators, falls partly on the lawyers and partly on the product development staff. It is one of those grey areas where the proper role of the legal department depends on too many factors to make any “best practice” call (See my post of Aug. 5, 2005: so-called pre-law groups including those who check promotional material; Dec. 3, 2007: rollout of new product requires marketing review; Dec. 17, 2008 #1: software to check promotional material; and Jan. 20, 2009: sometimes lawyers oversee marketing review personnel outside the law department.).

The law departments of companies with famous and valuable brands spend time combating counterfeit products. Actually, to varying degrees all companies protect their key brands and protect them as vigilantly as they believe is warranted. When you’re Procter & Gamble with 350 lawyers, the intellectual property to be guarded of its well-known brands deserves special attention. It gets it, according to Deborah Platt Majoras, P&G’s General Counsel, who describes some of the efforts in SuperLawyers, Bus. Ed. 2011 at 191.

The P&G legal team works with governments to find counterfeiters and pays special attention to online sellers of fake products. As I read the description of tasks, it seems yet again that the legal component (counsel and interpretation) matters less than the operational details (process, training, communication) (See my post of Oct. 11, 2008: role of law departments in anti-counterfeiting.).

“59 per cent of respondents [to the survey referenced below] indicated that the percentage of legal work outsourced to an external law firm has decreased in the past five years.” This quote comes from The In-House Perspective, April 2011 at 13, which cites Deloitte & Touche’s “Forensic Corporate Counsel Survey 2010: do today’s corporate counsel hold all the cards?” I have not been able to obtain a copy of the report.

Are we to read this squib that for almost two out of three legal departments over the past half decade, of the total legal work needed by their companies, the proportion handled by outside counsel dropped? How did respondents estimate the figure let alone measure it? If true, this shift would justify significant staff increases in law departments and a consequent rise in lawyers per billion of revenue. Neither has happened.

When you rely on someone else’s summary of research, you might be dealing with a bad translation. Even so, this summary statement of a survey finding caught my attention: “82 percent of respondents [to the survey described below] reported an increase in regulatory activity within the past year. The most common form of regulatory activity was the service of subpoenas seeking document production.”

The quote comes from The In-House Perspective, April 2011 at 13, which cites Deloitte & Touche’s “Forensic Corporate Counsel Survey 2010: do today’s corporate counsel hold all the cards?” Investigations by government agencies certainly drive some amount of in-house legal work, but formal requests for documents hardly constitute what most people think of as regulatory burden. Regulatory burdens consist of pages and pages of rules that interpret or apply statutes – themselves already jungle-like – or that set forth requirements of government agencies. Document requests might be common, but regulatory activity for a law department ranges much wider.

Leaders League 2010 Intelligence Report at 73 tells about the efforts by Pernod Ricard’s law department to discipline the company’s use of domain names and enforce their rights as to others. In 2008 they conducted a global audit of their domain names. “We wrote our own rules designed to correct past errors by consolidating a consistent global portfolio.” They assigned an in-house specialist to ride herd on the group of names. That included filing for new registrations, abandoning unnecessary names, and recovering names that had been wrongfully or misleadingly registered by third parties.

With more than 26,000 brands all over the world, Pernod-Ricard must vigilantly keep an eye on the proliferating tumult of domain names. Whether the law department should do so is a different question (See my post of Sept. 27, 2005 #2: tracking domain names should not be a responsibility of the legal department; and April 13, 2010: relative numbers of domain names, patents, and trademarks held by companies.).

Those who manage in-house lawyers should have a framework for how to assess potential rates of productivity increase. In the August issue of Strategy + Business, at 33, Booz & Company states that during the 20 years from 1987 to 2008, US manufacturers increased productivity at a cumulative annual growth rate of 1.6 percent. The entire private business sector only managed a 1.0 percent rate, which means service-sector productivity barely rose year over year.

Law departments may have fared the same. I have several times returned to the topic of the meaning of in-house efficiency and productivity, which has multiple factors because it rests on labor and capital – capital primarily consisting of technology and knowledge resources (See my post of March 24, 2005: the gaping hole of productivity measurement; April 3, 2006: analysis of the term “productivity”; Aug. 8, 2006: assumptions in the term productivity; Feb. 7, 2008: productivity compared to capacity; and Nov. 29, 2009: productivity defined and talent tools discussed.). Multifactor productivity, which Booze defines as “the changes in economic output per unit of combined inputs,” probably can increase more where tools and machines operate, less where personal services such as legal counsel are paramount.

If one percent per year or so of productivity improvements has validity, expectations of increases in law departments – assuming we were able to measure it – should be in line. To that point, though, someone might say that legal departments wallow in 19th century practices and culture, so they are ripe for dramatic productivity boosts. I have my doubts, since the essential tool of lawyers – an experienced and educated brain – has evidenced few operational improvements recently.

“The routines put in place to enhance productivity often hinder the practices that foster learning” This dispiriting trade-off comes from the Acad. Mgt. Rev., 2011, Vol. 36 at 461. Some scholars refer to this as the productivity dilemma: do something with formalized consistently and you retard improvement.

Law department managers want to lock-down repetitive activities, which speeds handling and improves overall quality. At the same time, once a process is codified and rules adhered to, those who follow the defined path have less incentive or reason to think of improvements. The same could be said about form documents. Standards clash with kaizen and one of them has to give ground.

As I thought about the advantages of large law departments, I thought of delegation and assignment. Bigger departments have more lawyers and paralegals, so they can use both to spread the work around to better match the person’s skills.

That led me to consider the differences between the two verbs, assign and delegate. To me, “delegate” implies sending work to a junior person and some level of ongoing supervision and review at the end (See my post of Aug. 28, 2008: delegation in a law department with 14 references.). You delegate work to a paralegal or to someone who reports to you, vertically down the reporting structure.

The term “assignment” suggests that the work is handed off to a capable person and nothing more need be done. You shift the work, sometimes across the law department as when litigation assumes responsibility for a dispute that goes bad.

Teams = praise. We extol teams constantly, but we may not have objective evidence to support that widespread belief. When a group of people work together on a project, many times they succeed better than if individuals members went ahead on their own. Other times, however, teams falter for various reasons. For example, citing research by Elliott Jaques, the author Robert Rowland Smith, Breakfast with Socrates (Free Press 2009) at 47, notes that “the spreading of effort across several people leads both to a diffusion of accountability and to a confusion of role.”

Perhaps because of my contrarian streak, I have accumulated a number of posts that attack teams (See my post of Jan. 6, 2006: demographic diversity has a negative effect; Aug. 28, 2006: attack on committee effectiveness; Jan. 20, 2007: task conflicts and relationship conflicts; Jan. 11, 2009: law department’s online tool to diagnose team problems; May 29, 2009: performance problems as team size increases; June 4, 2009: four challenges of teams; June 23, 2009: does background diversity help a team; May 26, 2010: heterogeneity may degrade a team’s performance; and June 16, 2010: diversity can obstruct team effectiveness.). To this array I would add group think, peer pressure, chilling effects, and brainstorming gone awry.

The mantra for managers: if work can be delegated to a lower-cost, capable person, strive to do so. While that sounds good, still I mused about the $200 an hour Associate General Counsel (using a fully-loaded cost per hour that shouldn’t take anyone back) who delegates a task to a $50 an hour paralegal. Let’s take for granted that the paralegal can do the task as well as it needs to be done.

Here’s the rub. If it takes the paralegal five hours ($250 cost to the company) but saves one hour of AGC time ($200 cost to the company), do we still approve the delegation? Yes, if the AGC can thereby generate more value during the saved hour, such as to concentrate and make progress on a tough legal problem.

Jobs that an experienced and more expensive lawyer can’t do any faster, such as Bates stamping, photocopying and indexing, are automatic candidates for delegation. Jobs that on a pure economics basis might be reserved from delegation should in theory still be sent down if the time saved above has a higher value than the hourly cost differential.