Articles Posted in Productivity

I have dreamed for years of being able to measure legal intensity, an objective index that shows one industry faces more legal issues than another, and by how much. The researchers of McKinsey may offer one piece (McKinsey Quarterly, 2005 No. 4 at 95).

The article, on regulatory strategy, identified “selected regulatory issues” for each of ten industries. For example, for the Power industry: implementation of the Kyoto Protocol, capacity regulation, and transmission regulation. One industry had four regulatory issues (Pharmaceuticals), two had three issues (Power and Telecom), five had two (Transportation, Insurance, Financial, Petroleum, and Basic Materials), while Food and Natural Gas had one issue each.

Granted that if the specifics can be debated endlessly, the methodology appeals to me. Have experts assess the relative number of major regulatory issues facing an industry, and then correlate lawyers per billion of revenue, for example, to those findings. With enough analyses like that, each covering a different practice area or cause of legal work, a quantitative picture will emerge of relative industry legal challenges

A review of “remote working,” BusinessWeek, Dec. 12, 2005 at 78, mentions figures that might give law departments some things to consider when weighing the pluses and minuses of telecommuting. (See my posts of Sept. 25, 2005 on unmet desires by lawyers to work from home, Oct.18, 2005 questioning that data, and Oct. 19, 2005 on obstacles.)

At IBM, 40 percent of the workforce has no office at the company; at ATT, likewise for thirty percent of the managers. Sun Microsystems nearly 50 percent of its employees can work from outside the office, saving the company $300 million in real estate costs. For Agilent, where 70 percent of the workforce “is connected remotely either some or all of the time,” the company “estimates that these virtual workers cost 60% less.” Finally, Sun says its virtual workers are 15 percent more productive than its office workers.

We are likely to see the 20th century paradigm of lawyers in offices, with large filing cabinets inside and outside, flanked by secretaries go the way of the rotary dial phone. With savings on facilities, higher retention rates for workers, and increased productivity – if these are true, law departments will start to disperse their lawyers.

A piece by a Thomson & Knight partner states what must have seemed obvious to that person: “The in house attorney is the gatekeeper between the outside lawyers and their management.” I challenge that assumption of necessarily serving as an intermediary and watchdog.

Where the in-house counsel can add knowledge of the business, practical experience with the legal issue, or insights of strategy and nuance, the heavy lifting should be by outside counsel and let the inside lawyer step aside. Clients wonder about the value added by their colleague lawyers as it is.

Unless the inside lawyer adds value, let the outside lawyer speak directly to the client.

In 2003 the American Arbitration Association (AAA), using an independent market research firm, interviewed by telephone 254 US general counsel or other senior law department lawyers. According to a summary published in the ACC Docket, July/Aug. 2004 at 93 , the respondents were asked to rank their law departments on eight attributes.

The aggregate scores from those self rankings were the basis for the researchers sorting the companies into three equal groups. One group, with the highest scores, they called “dispute-wise,” the middle third of scores made up the intermediate group of companies, and the third with the lowest scores were, shall we say, “dispute-dumb.”

For those law departments who gave their internal and external legal spending, the dispute-wise were reported as having “40 percent lower mean internal legal department budgets” than the dispute-dumbs. Bizarrely, the mean external legal budgets were virtually the same. Size does not explain the results, because the three size and type categories (Fortune 1000, “mid-size,” and privately-held) had close to equal representation.

Only the largest law departments can afford their own technical support, people on the legal budget who report to the department’s administrator and help maintain matter management systems, specialized databases and other legal-specific applications. Most depend on corporate IT to support even law specific applications (red-lining, document assembly, and others), not to mention the plumbing of networks, telecommunications, and the standard software of the company like word processing and e-mail (See my posts of March 26, 2005 about firms helping with departments’ technology and July 21, 2005 about extra services of firms.)

Many law departments have staff who handle invoices from outside vendors, but they also rely on a person from the CFO’s group to organize the more elaborate budgets and presentations. Indirectly, also, law departments depend on accounts payable to cut checks and record spending in the general ledger system.

Along with technical and financial support, law departments find support from Human Resources. Combining with their own people who conduct evaluations and some personnel management, law departments get more substantive strategy and tools from HR (See my posts of Aug. 24, 2005 on HR doing exit interviews and Nov. 8, 2005 about HR representatives to law.)

In a 2005 McKinsey Global Survey of Business Executives, one of the questions asked how much time the executives spent per week on “e-mails, voice mails, and meetings that are not valuable.”

Thirty nine percent of the executives said one half to one day a week disappeared into such valueless communications while another 16 percent estimated 1 to 2.5 days.

Assuming senior lawyers would be as besieged as these executives, the results should dispirit them. Communication remains imperative, especially to cope with legal complexity, but the sheer volume of it, not to mention the time drain of much of it that is low value, eats away at valuable productive time.

This mission statement, from materials distributed at a 2005 ACC Annual Conference session, hits all the standard buttons.

The Legal Department’s mission is to efficiently and effectively administer the legal affairs of the Company by internally providing professional, timely, and useful legal advice and services, arranging and actively managing the services of outside counsel as needed; to minimize liability exposure by recommending and implementing appropriate policies, practices, and procedures; and to administer such legal affairs in the most cost-efficient manner reasonable so as to contribute to the Companywide team effort to maximize the Company’s return to its stockholders.

No paragon of prose style, this rambling 80-word sentence, but replace “Company” with your company’s name and you can check the to do box done.

A thoughtful piece by Tony Williams (Legal Week, Vol. 7, Nov. 17, 2005 at 18) comments on how often there is a disconnect between the value a client perceives from a firm’s work and the value the law firm ascribes to its work. He illustrates the point with two pyramids.

From the law firms’ view, “rocket science” work is at the large end of the pyramid – much work deserves that rank, “high skill but routine” is in the narrower middle, and “commodity” services are the small tip – that is, not much that law firms work on is routine, no-brainer, sausage-making.

Clients, however, upend the pyramid. They view much of the work they send out as commodity, a somewhat smaller percentage than law firms consider “high skill but routine,” and only the small tip, the infrequent matter, to be “rocket science.” Williams holds it unlikely that rocketry (into which lands the oft-cited but rarely experienced bet-the-company drama) accounts for more than 10-15 percent of the UK legal market.

At a conference I attended, one of the panelists extended the commonplace about hiring a lawyer. He said that an individual lawyer might be the catalyst for a retention (“We like Chris.”) , but over time, the plenary capabilities of the firm attach it like ivy on an old wall.

When I learned that at the end of 2004 the number of US-based law firms with more than 400 lawyers had reached 92; that the 20 largest firms averaged nearly 1,400 lawyers; it hit home how much attachment these huge collections of legal talent could affix. Departments hire a lead lawyer, but over time grappling hooks hold the firm and department together. (See also my posts of April 18, 2005 on attitudes of law departments toward large firms,May 10, 2005 on behemoth firms, and Oct. 23, 2005 regarding large-firm overhead.)

In a recently-published article (Legal Times, Nov. 21, 2005) , I assembled thirty (30) different methods by which law departments can improve how they processes contracts.

Later, Counsel to Counsel, Nov. 2005 at 27 laid out more methods, devised by the law department of BindView Corp.

(1) “Finding that its customers were asking for the same items over the course of many negotiations, the firm retooled its standard contracts to include many of those requests.”