Articles Posted in Structure

As I write in my blook on law department structure, “In U.S. law departments, the number of direct reports to the general counsel rises gradually with the number of lawyers, but plateaus at around six.” What accounts for the number of reports to any particular general counsel?

Assume a general counsel arrives in a 50-lawyer department with a magic wand to wave and create the best structure of her direct reports. This scenario ignores the powerful forces that shape reporting lines of corporate tradition, size of the law department, and HR policies. That said, here are most of the remaining factors.

Business structure: the number and size of business units that would benefit from an oversight lawyer (indeed, the decision whether to organize the department by legal perspective or by business organization and function).

Some observers call law firms “global” if they have at least 25 percent of their lawyers oversees, I read in David Galbenski, Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today (2009) at 37. Why not apply the same threshold for a definition applicable to legal departments? I have twice collected posts on international law departments but haven’t tried to define terms (See my post of March 1, 2009: creating a one-department culture with 7 posts and 5 metaposts; and Jan. 16, 2009: decentralized law departments with 13 references.).

I propose that we refer to law departments as “global” if they have (a) at least a quarter of their lawyers outside the country that has the largest number of lawyers – presumably the home country and (b) lawyers on a least two other continents.

Don Liu, general counsel of Xerox, states in a recent book that “Fifty-three percent of Xerox’s revenues and related legal work is not based solely on U.S. law.” I wonder if Liu is simply stating that a bit more than half of Xerox’s revenue comes from outside the United States, and that the legal work to generate that revenue must necessarily involve some non-U.S. law. Surely he does not measure hours worked on matters designated as non-U.S.. The quote comes from David Galbenski, Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today (2009) at 34.

At General Electric, more than half of the company’s revenue came from outside the United States [HBR, Oct. 2009 at 58]. I doubt that more than half of GE’s lawyers are based outside the United States. At 3M, two-thirds of its revenue comes from outside the U.S., and half its lawyers are stationed overseas (See my post of May 15, 2009 #4: metrics on 3M.).

For U.S. legal departments, the percentage of lawyers based outside the country will likely always lag the percentage of revenue generated outside the US. What the formula eventually settles on for the typical department awaits benchmarks yet to be gathered and published.

A lawyer’s office is her castle, her sanctuary, her expression of self, not to mention her frequent lunchroom. Having just issued my metapost on physical configurations beyond the office door, here let me zero in on the individual offices of lawyers in corporations (See my post of Sept. 30, 2009: physical components of legal departments other than offices.).

Desks are the dominant furniture in offices (See my post of Nov. 17, 2008: piles on desks and procrastination; and Nov. 8, 2005: mobile desks at SEI.). Next are the chairs at the desks (See my post of Sept. 17, 2009: ergonomic chairs; July 29, 2007: to speed up meetings, do away with chairs; Feb. 7, 2008: infrastructure includes chairs; and Nov. 23, 2008: thermogenesis on a treadmill.). Desks often and offices always have lights (See my post of Dec. 26, 2007: lights and energy-saving; Aug. 4, 2008: better lights for older eyes; and Sept. 22, 2009: dimmers and other light savers.).

On the desks are desktops or laptops in docking stations, each with one or more monitors (See my post of Jan. 18, 2008: multiple monitors; April 27, 2008: flat panels and energy; Aug. 4, 2008: magnify screens; Nov. 9, 2008: double monitors; Aug. 3, 2009: multiple monitors; and Aug. 4, 2009: how and why to add another monitor for your desk.).

This blog has passed on thoughts from time to time about the architecture of law departments

(See my post of Sept. 16, 2008: physical layout of offices with 10 references.). It is a rare general counsel who has any significant say in how the overall physical footprint of the department is laid out. Most aspects of infrastructure – hallways, walls, columns, and plumbing – are set in stone, so to speak (See my post of Feb. 7, 2008: infrastructure does not move.).

Despite those constraints, this blog has views on such components as conference rooms (See my post of April 8, 2005: rules for use of conference rooms; May 7, 2006: Computer Associates; and March 1, 2008: reservation systems.) and libraries (See my post of Feb. 24, 2009: libraries with 8 references.).

Mark Prebble, Managing In-House Legal Services: Providing High Value Support for Your Organisation (Thorogood 2009) at 5, writes that “My belief is that the minimum size for a viable legal department is two, one of whom may be a good support person with paralegal capabilities.” Prebble, who consults to legal departments, adds in the book that he has “met so many sole in-house lawyers who are at the end of their tether, that I strongly recommend that you get some assurance that you will be able to recruit a colleague within a year.”

They should wish. Legal “departments” of one lawyer are quite common, on the order of one out of five in the United States (See my post of Dec. 27, 2008: small departments with 7 references cited.). Usually, however, the CEO believes it is a stretch to bring a first lawyer in-house, full time, and it is not in the cards to quickly double the size of the department. The single lawyer might not even bear the title of general counsel. The new lawyer on the block stands a better chance of being authorized to spend more on counsel outside than to hire someone inside.

Solos fly that way for long periods of time and cope (See my post of Feb. 16, 2006: solos must particularly attend to how they use their time; Feb. 15, 2006: six ways being alone reduces management hassles; April 16, 2006: stress and the single GC; April 15, 2006: solo GC compared to Deputy GC on pressure; Feb. 11, 2007: one lawyer departments accounted for one-third of a survey; Dec. 17, 2006: ADVO and its lonely GC; and Feb. 14, 2009: mix of compensation elements for one-lawyer departments.).

A survey conducted by Asian-Counsel published findings about the size of the “legal/compliance teams.” Here are the size breakdowns, rounded off: 1 person (7%), 2-5 people (42%), 6-20 people (34%), 21-50 people (10%), and 51 or more (7%). This size pattern, from Asian-Counsel, e-edition, Vol. 7, July/Aug. at 24, matches the size pattern of US legal departments.

Since Asian legal departments also have a bit more than one lawyer for every non-lawyer, internal legal teams of 1-3 lawyers constitute almost 50 percent (See my post of Dec. 27, 2008: recommends 5 or fewer lawyers to be deemed “small” and gives comparable distribution figures.). I have compiled some posts on small legal departments (See my post of Dec. 27, 2008: small departments with 7 references cited.).

It has an officious tone, an imperious that puts me off. Beating hearts and thinking brains are within, yet the clammy, 1984-ish “The Office” may or may not oblige your obsequies. I like flesh and blood (See my post of July 20, 2008: do not describe colleagues as “resources”.) and I do not like the pall of a Wizard of Oz omnisciently making decisions behind the curtain.

The Office of the General Counsel is written about in bureaucratese, full of passives and nominalizations. I like I. I like the buck stops here, on a real human’s desk. I don’t like the Mandarin fuzziness of an administrative term. Nor would Kafka.

But perhaps the Office of the Blogger is too subtle?

Finally, I have finished my blog book on effective law department structure. It is 143 pages, including the index. Unlike my blooks on outside counsel management and talent management, this one is written like a book, but with 100 or so blog posts about structure interspersed. It has recommendations and many tables, but is still in a substantial way a framework for blog posts.

If you would like the blook, email me and put in the subject line something about the structure blook.

In the 1930s, Karl Popper, a philosopher of natural and social science, introduced the notion of society as an unpredictable complex system. At a smaller scale, the economy is a quintessential example of a complex system. According to William A. Sherden, The Fortune Sellers: The Big Business of Buying and Selling Predictions (John Wiley 1998) at 69, “Complexity refers to the phenomenon of order emerging from the complex interactions among the components of the system influenced by one or more simple guiding principles.”

My question: do the principles, summarized below, mean that large law departments qualify as complex systems.

“Complex systems have no natural laws governing their behavior at either their micro-level (individual humans) nor their macro-level (the economy); thus, complex systems cannot be scientifically predicted.” Certainly no legal department obeys “laws of management.”