Articles Posted in Productivity

The most common method of assigning litigation lawyers is by type of case. An alternative is to assign them by geographic area – especially if most of the lawsuits are similar – or by business unit. Sometimes new cases simply go to the lawyer who has the most availability. And in some claims litigation functions, lawyers are assigned by the difficulty of the cases in accordance with their experience and capabilities.

Each of these allocation methods has advantages and disadvantages, and most law departments that have a litigation group mix and match.

Two speakers from SPI litigation direct presented useful information at the recent NJCCA Full Day Conference. Their PowerPoint slides explain the need for litigation contingency planning, and talk through the basic steps: assess discovery patterns in your law suits, look at the technology and processes that can help you respond to that discovery, and develop the components that count (policies, resources and workflow). The document has an especially good slide on hold notices.

Given the mushrooming costs of discovery, especially electronic discovery, deliberate thought beforehand pays off (See my posts on March 5, 2005 about a blog on e-discovery, Aug. 24, 2005 more generally on e-discovery, and Oct. 1, 2005 about expenses.).

The Project for Attorney Retention (PAR), an initiative of the Program of Worklife Law at American University’s Washington College of Law, published a lengthy report in December 2003 (10 Wm. & Mary J. of Women & L. 367 (Spring 2004)). The authors wrote that “the vast majority of attorneys reported that full-time attorneys at their corporations are generally in their offices between forty-five and fifty hours most weeks.” (pg. 390)

If we take the mid-range (47.5 hours a week) and subtract the four weeks for vacation and two weeks for holidays and another week of absence for sickness or other reasons, that leaves 45 weeks at 47.5 hours per week, or 2,138 office hours per year. Some of that time would not count as chargeable to clients, such as time spent recruiting, or being evaluated, or during continuing legal education. Perhaps one out of ten hours would not be chargeable if the attorney were in a law firm? If we subtract 10 percent (214 hours) from the 2,138 estimated above, that leaves 1,923 hours.

Surveys and benchmarking studies have for years used 1,850 chargeable hours a year for purposes of calculating the fully-loaded cost of lawyers per chargeable hour. For my money, that rule of thumb stands the challenge of the somewhat higher figure deducible as above from the PAR report.

Although all companies have trademarks and nearly all have domain names, patents sit in the first chair. Patents conjure up genius inventors, market creating ideas brought to commercial triumph, super-sized litigation fees, seven figure annual maintenance fees, and whopping infringement damages. Patents are steroids; trademarks are body lotions.

Trademarks, even in global brand companies with tens of thousands of registered marks in 200 plus jurisdictions, just get no respect®.

I learned that the law department of a major consumer products company has a writing program for its staff. Excellent idea, because much persons isn’t really actually you know what I mean all that good enuff when they write words what they think is ok, sort of.

At least one consultant on writing, Susan McCloskey, has helped law department write better. Writing is an important adjunct to substantive legal knowledge.

A consumer products company had fixed on ten core principles of its brand-building efforts. While consulting to the company’s law department, we matched against those principles how the lawyers and paralegals estimated they had spent their time in the previous twelve months. We honed those activities down to about 19 and then rated them on a scale from one to five according to their contribution to brand building. In the end, pie charts showed time spent on level 5 activities, on level 4 activities and so on. This exercise showed directly the connection between the law department’s activities and the core principles of its client.

Next, we broke down outside counsel spending according to the same 19 activities. We took the total inside budget and multiplied it by the percentage of time allocated in total by the professionals to each of the 19 task categories. By that calculation, we created a dollar figure for inside activity, which we compare with the dollar figure for outside counsel on the activity. With those totals, we could show total legal spending for the year by the brand-building activities.

Why might a general counsel send all the work in an area – such as environmental, patent, ERISA, or employment (and some or all of the inside staff doing it) – to a single law firm on a fixed fee basis? Why outsource an area of work?

To reduce costs: my experience consulting on seven outsourcings is that the savings can be from 10-20 percent from the extrapolated total spending projection

To improve service: law firms with sizeable practices have a broader and deeper array of talent to assign to matters according to the different complexities of the matters

A unit of Cargill’s legal department, cited in a GC Roundtable report, has a policy regarding litigation. “Except in cases involving allegations of fraud, illegal or criminal activity or cases with significant policy or precedential value, the Law Department will no longer handle matters with a dollar exposure of less than $25,000.”

Some law departments define thresholds for contracts that they will review, such as by dollar commitment, by degree of trading familiarity with the other party, or by level of business executive signing the contract – but always with some triggers that require law department review.

Both of these standards, for litigation and for contracts, and many others, keep in-house lawyers attending to important and higher-risk matters, not shoveling against the tide of minor matters that have little legal significance.

Here’s a controversial idea: “The [Cisco Systems] legal department set out to satisfy managers by automating routine legal transactions and letting employees handle the details by the Web.” (ABA Journal, Sept. 2005 at pg. 55). Most law departments shiver at the thought of letting clients, barbarians outside the gates, create even quotidian legal documents.

The years ahead, I predict, will see more and more self-help by clients, enabled by law departments that make available to clients form documents (See my post of Aug. 31, 2005 about Schering Canada.), record answers in searchable databases to frequently asked questions, unleash the capabilities of document assembly (But see my post of March 24, 2005 about document assembly treading water.), set threshold requirements for legal review, effectively train clients, designate legal coordinators at clients, share knowledge in consortia (See my post of July 21, 2005 about a data consortium.), apply artificial intelligence tools (See my post of March 27, 2005.), better their knowledge management investments, maintain industrial strength intranets – all to the end of removing lawyers from lower value, lower risk assembly-line law and instead having them guard the parapets of important legal decisions.

Each year, the law department of a $20 billion plus manufacturer in the Northeast processes from its 250 law firms about 26,000 invoices (one hundred a day!). The department requires its firms to submit a bill every month for every matter they are handling.

Suppose each invoice gets five minutes of lawyer review, at $150 an hour fully-loaded, and ten minutes of administrative time for data entry, copying, scanning, reporting, quality control and other steps, at $50 an hour fully loaded. The internal time cost of processing each invoice would be $20.83 ($12.50 lawyer time and $8.33 support time). For the torrent of invoices, this level of cursory review and minimal management handling reaches approximately $540,000.

Stated differently, the 2,100 lawyer hours shunted to bill review amounts to the equivalent of a full-time lawyer. (But see my post of July 31, 2005, about fictitious time savings and ROI on spam filters.)