Articles Posted in Showing Value

Jay Stephens, the general counsel of Raytheon, spoke recently at a Director’s Roundtable. His remarks are in a special supplement to the Nat’l Law Journal, Feb. 2007 at 3. During them he summarized the half-dozen roles incumbent upon a general counsel (See my post of July 14, 2005 on the multiple roles of in-house counsel generally; and Oct. 8, 2005 on general counsel specifically.).

“First and foremost, the general counsel must be a business partner.” Second, the general counsel must be a legal counselor. Third, the general counsel sometimes becomes an advocate for the company. Fourth, at times a general counsel needs to serve almost as an inspector general. Then there are times when the role of the general counsel is to be an “honest broker” of information and views. And, sixth, the general counsel “is fundamentally a problem solver.” Stephens also is of the opinion that ultimately the primary client of the general counsel are the shareholders — “and the Board of Directors in governance terms represents the interests of the shareholders.”

What law department does not aspire to be world-class, to deliver cost-effective services, to be viewed as one with their internal clients, to foster collegiality and to boast the best and brightest lawyers? What departmental mission would not boast of teamwork, creativity and deep knowledge of the business?

In other words, why are not most law department mission statements virtually carbon copies of each other – at least as far as the concepts go? The words, bullets, formatting, and lamination may vary, but underneath do not all law departments that articulate their ambitions strive for the same values? (See my post Dec. 7, 2005 on various aspects of mission statements and references cited.).

The mission statement of Johns Hopkins Medicine’s Legal Department could be prescribed , with XYZ filled in, for any law department. Examine it yourself, but let me quote and generalize that legal department’s statement: “The mission of the Legal Department of [XYZ Corp.] is to further the strategic goals and to protect and preserve the legal, ethical and financial integrity and reputation of [XYZ Corp.]. Such a mission statement expresses lofty ideals, exudes the resonance of profundity, and washes smoothly over the legal landscape – but try to ground it on the shore of reality, to operationalize it, to make it intelligible to Chris Lawyer (See my post of Jan. 15, 2007 on high-level statements and the knowledge curse.).

Too much foam, too little wave.

One area that frustrates many legal service providers is that their solutions are often best when deployed throughout the legal department. But in-house counsel are reluctant – reasonably – to jump in with both feet, instead wanting to start with a smaller pilot project.

As you design these pilots, remember that part of the rationale is to see what the vendor can do, but the “project” nature of the pilot may be skewing the results. Some offerings are not set up to work this way, and some sellers may be taking a financial hit to prove themselves. Lean on your vendors to help create a pilot that will show their full capabilities and account for reduced value as you evaluate the results of these pilots. [Brad Blickstein, Blickstein Group, on legal service providers]

When evaluating legal service providers, it is important to consider the all-in cost, not just the fees paid to the service provider itself. Less-expensive software that will cause a lot of work for the IT operation may end up costing more. (RWM – See my post of April 7, 2006: the full cost of a new matter management system should include conversion of data.)

As another example, some e-discovery companies are starting to focus on reducing the number of documents that must be reviewed for responsiveness and privilege. Since the review phase usually exceeds the cost of e-discovery, a more expensive technological solution may reduce overall costs tremendously. [Brad Blickstein, Blickstein Group, on legal service providers]

A legal consultant’s presentation I have seen includes a slide that ascribes values to three intangible benefits of in-house lawyers. One is “Knowledge of the business.” In a column to the right entitled “Value” are the enticing words “20 to 25% added value.”

Mirabile dictu! This claim, unsupported by any reference, suggests that a typical corporate lawyer provides a quarter more value for cost than an outside lawyer – given the same amount of time either employed or retained by the company — because of how well the employed lawyer understands the company’s business. The general notion makes sense but it’s nonsensical without backup and explanation to quantify it.

The third benefit on the slide was “early intervention/preventive law” to which a quantified value was also prescribed: “Significant value — conservative estimate — 10 to 15%.” This value delivered must assume that in-house lawyers will become involved more early in matters and also that they can train clients and therefore ward off legal evils.

SAP Canada has 11 members in its legal department, according to an interview in Canadian Lawyer Inhouse, Vol. 1, June 2006 at 13, of its general counsel, Barry Fisher. Fisher is proud that his department “became a profit centre when it adopted a tool that verifies and audits the degree of customer usage under a software license.”

Apparently the law department has taken on the responsibility of monitoring usage levels compared to licensed levels and, it is left unsaid, obtaining additional payments. That a law department is brought in where a customer balks at paying license fees or disputes the interpretation of the license agreement surprises no one; that a law department monitors and enforces compliance with licensing terms does surprise. Policing payments is not the valuable function of a law department.

I also remark on the IP productivity of the department: Fisher notes that it filed 1,700 patents in 2005. A prodigious output, it seems to me, for a handful of lawyers, unless applications are prepared by others or most of the work is administrative prosecutions through the Canadian patent office.

“The minute you need data more than once, it becomes cost prohibitive to have anyone but the company manage it” says Laura Kibbe, a senior lawyer at Pfizer and an e-discovery specialist (See my post of Oct. 1, 2005 for background about Kibbe.). I take no position on the correctness of her view, from Law Firm Inc., Vol. 5, Jan./Feb. 2007 at 24, but it set me thinking in a different direction.

What percentage of lawsuits against a company are related to other lawsuits? By that I mean, if several plaintiffs sue regarding the same product, service, or transaction, wouldn’t the company probably be asked to produce the same data more than once? It seems quite plausible to me that the Kibbe standard would be triggered on a plurality of a company’s lawsuits. Increasingly, law departments are being pushed to commandeer e-discovery capabilities in-house (See my post of Feb. 14, 2007 regarding an e-discovery organization.).

The legal group of many companies has some responsibility for policies on records management. At the least the lawyers help to identify and apply the legal requirements for retention and deletion policies; at the extreme the legal department is tasked with enforcement of those policies. With that range of responsibilities in mind, consider data from NextPage’s survey in May 2006, which obtained responses from 108 IT professionals who subscribe to CIO Magazine.

The survey results below comes from a handout at the recent LegalTech conference. “While two-thirds of the companies surveyed have a document retention policy in effect, almost half of them don’t actively enforce it.” The best legal advice in the world amounts to little if there is flaccid enforcement. And legal concerns drove most of the efforts: “Primary drivers for their document policies were regulatory compliance (61%), ensuring confidentiality (38%) and reducing risk of litigation (33%).”

One more quote highlights again the interaction of legal analysis to decision-making and operational support: “The greatest weakness in document retention efforts: 39 percent answered implementing a standard policy, 38 percent listed a document disposal policy and 34 percent said user compliance.” Lawyers should be tangling with each of these three risk areas.

It’s one of my fancies to delve into histories of companies, old magazine and newspaper articles, and house histories of law firms – to name a few sources for archival digging – and to compile a historiography of US law departments. A previous post described my foray into TimesSelect NYTimes.com/Trial to look for early articles published in the New York Times that referred to law departments (See my post of Dec. 31, 2006.). John Grisham needn’t feel threatened by the page turner that this antiquarian foible may produce. But then, with Tom Hanks cast as the debonaire blogger….

Here are some tidbits, previews of coming attractions. AT&T early on had an internal law department: “C. P. CELEN, 64, PHONE EXECUTIVE; Vice President and General Counsel of A. T., T. Company Dies in Home Here LAW HEAD FOR 16 YEARS Served Government in World War in Litigation Over U. S. Control of Wire Systems,” Oct. 9, 1942, Page 21, 175 words.

A decade before, we find riveting evidence of a Boston & Maine legal team: “T. S. ALEXANDER DIES; PROMINENT ATTORNEY; Former General Counsel of the Boston & Maine Came Here From Boston,” Oct. 1, 1934, Page 17, 85 words. And to cap it off, this bouncy scene from US Rubber about a politico appointed to head the legal department: “U. S. RUBBER EARNED $10,000,000 IN 1920; Reserves Took Care of Sharp Declines-Tire Trade Now Almost Normal. JOHN W. DAVIS ON BOARD Ex-Ambassador to Great Britain Will Become Company’s General Counsel.” April 20, 1921, Bus. & Fin., Page 27, 247 words.