Articles Posted in Structure

The new company general counsel at Siemens, the engineering and technology giant, significantly restructured the sprawling legal function. As reported in Legal Week, April 3, 2008, Peter Solmssen appointed general counsel for each of the company’s corporate, energy, industry and healthcare groups as well as regional counsel for the Americas, Europe, CIS and cross-sector businesses. The company is recruiting a general counsel for Asia, Australia and the Middle East.

This marks the first time the direct reports to the global general counsel have these responsibilities. It is also a clear example of matrix reporting (See my posts of Aug. 27, 2005: “double solid line matrix”; Feb. 15, 2006: the bane of combining reports; June 24, 2007: Cadbury Schweppes; and May 21, 2006: business lawyers and legal specialists.).

On a different topic, Solmssen issued a statement about the appointments that said “The [new] general counsels will not just give legal advice; they will have a formative role and decision-making function in business operations. Their responsibilities in this key position will go considerably beyond merely identifying risks.”

“At most companies, responsibility for intellectual property still resides in the legal counsel’s office rather than with the chief technology officer, chief financial officer, or some other manager responsible for guiding financial and commercial growth.” The tone of voice being so querulous, the author obviously thinks that dumb old patent lawyers don’t think about what makes money. Narrow technicians, scriveners with little conception of profit and loss, they should step aside for grown up business executives to take charge (See my post of Feb. 17, 2007: should the general counsel oversee IP activities.).

The point is made by David Kline, a writer described as specializing in IP strategy, in strategy+business, Issue 50, 2007 at 16. I agree that oversight of intellectual property exploitation must come from business executives (See my posts of Feb. 19, 2006: decentralized IP lawyers report to R&D; Nov. 28, 2005: buying and selling IP online; and May 10, 2006: educate clients about the value of IP.). Even so, I hardly think that veteran IP lawyers practice their craft oblivious to the dollars and cents at stake.

In law departments that have a number of conference rooms, members of the department often find it nettlesome to manage reservations of those rooms. People reserve a room, and then cancel or shorten their time. Others plan to use their office but an extra person or two shows up so they need a place to meet on short notice. Conference rooms are turned into war rooms or storage depots. Efficient and effective allocation of conference rooms becomes especially important where lawyers sit open plan.

Software lets a law department handle all reservations of conference rooms online. The software can even segregate the conference rooms by size and allow someone to search for an available room within a given timeframe. Software has access rights, so that only some people can reserve certain rooms or any room at all (See my posts of April 8, 2005: posted rules in meeting rooms; and July 29, 2007: six tips for meetings.).

The general counsel of Affymetrix, Barbara Caulfield, decided that she could increase efficiencies and save money if her law department handled IP litigation internally (See my post of Feb. 9, 2008: don’t “manage” litigation, handle it.).

An article in IP Law & Bus., Vol. 6, Feb. 2008 at 9, describes how she staffed the group, how it works closely with lawyers from two law firms, and some protective steps she took. So that the work of the in-house trial lawyers would not be open to discovery, she houses them away from the rest of the legal department and any business functions. Second, she separated their computer systems from the company’s computer system. For having taken measures such as these, “this arrangement has survived court challenges claiming waiver of attorney-client privilege.”

One of the efficiencies of having in-house litigation lawyers is that they can schedule depositions and interview witnesses much more flexibly than can outside counsel. The in-house lawyers can also comprehend their company’s technology as well as the patents involved, which reduces their preparation time. Caulfield estimates the direct costs for depositions or 20 percent less than when the law department had no specialized litigation group. The article points out that the internal group works on cases when Affymetrix sues another company, not when it is the defendant.

Many law departments operate to some degree as a loose confederacy of silos (See my post of March 1, 2007 on the risks of compartmentalized legal practices.). Groups of lawyers within silos [vertical reporting lines] burrow on with little sharing of knowledge or resources between them and other silos. Between the litigation group and the business groups there is little cooperation or sharing of knowledge. The IP lawyers warily eye the rest of the department (See my post of Dec. 31, 2007 on three such tensions.). Or the UK legal team barely knows its compatriots across the Atlantic. The siloed lawyers practice independently of each other.

MIT Sloan Mgt. Rev., Vol. 49, Winter 2007 at 13, discusses research about isolated subsidiaries that don’t share information with other subsidiaries. The authors conclude: “Subsidiaries that didn’t exchange knowledge tended to perform worse than those that did.” Analogously, isolated legal practices lose out when they don’t share knowledge and work product (See my post of July 25, 2007 on why Schering-Plough dislikes silos.).

Remedies exist for silo separation (See my posts of March 22, 2006 about some ways to address fiefdoms; March 22, 2006 on solutions to silos; Jan. 30, 2006 on cross-functional teams at Independence Blue Cross; and March 28, 2006 about PPG’s efforts to break down silos.).

At a recent panel, a senior lawyer with General Electric said his department has set up “Centers of Excellence.” He likened the Centers to shared services groups (See my posts of Dec. 31, 2006 on law departments as shared services and a definition; March 23, 2007 on Raytheon’s legal specialists in that structure; Jan. 17, 2006 on McDonald’s real estate function; Dec. 20, 2005 on document management and shared services; and July 3, 2007 on NCR’s organization.). The GE Centers consist of specialist lawyers who handle issues in environment, human resources, securities law, bankruptcy, and litigation. By the way, he feels more comfortable with the less-boastful term “Centers of Expertise.”

GE used to have seven strategic business units, each with its own specialist contingent of lawyers. Now, his colorful metaphor for the CoE group is that “you want the Hulk instead of the Seven Dwarfs.” Shared specialists make sense. Grumbling slightly, I twinge at the CoE designation because it exalts specialty lawyers – are generalist lawyers bumbling chopped liver? – and dilutes the terms “excellence” and “expert.”

In-house lawyers usually like to work some days from their house. Telecommuting has obvious advantages: flexible working hours, less lost time in commutes, lower parking and gas costs, and, arguably higher productivity. These reasons in favor or working at home come from a study by Lexmark International, cited in Bus. Law Today, Vol. 17, Jan./Feb. 2008 at 6.

Drawbacks to the arrangement also surfaced from the survey. The top three included “working more hours overall, dealing with frustrating technology issues, and feeling isolated from coworkers.” Another one I would add: not knowing which location has that book, report, paper or tool you need (See my posts of Jan. 3, 2008 on how to make a success of telecommuting; and May 30, 2006 for several references cited.).

Intellectual property lawyers create all sorts of fuss and bother in law departments because their skills and experience spill over into other practice areas (See my posts of Aug. 5, 2007 about Hitachi and its IP function; and March 28, 2006 on PPG’s.). Each overlap has the potential to cause tension, unclear roles, and inconsistencies (See my post of Jan. 13, 2006 with its statement that no IP department is an island.).

One flashpoint is responsibility over IP litigation. Which group of lawyers should have what responsibilities when there is a patent infringement suit? The most common rapprochement is for litigators to run the case, while patent lawyers shed light on the technology, reexaminations and Markman hearings, and the amount of the settlement.

Another divide is between commercial lawyers and IP lawyers over who has primary responsibility for IP licensing (See my posts of Jan. 3, 2006 on patent counsel and their value delivered; July 18, 2006 on three metrics for IP licensing; April 8, 2007 on the UVa licensing office; and March 28, 2006 on PPG’s separate groups.). Business unit lawyers usually do most of the drafting and negotiating, calling on their IP brethren for technical support and due diligence (See my posts of Jan. 13, 2006 on sharing licensing fees with business units; Jan. 3, 2006 about Navigation Technologies; Jan. 4, 2006 on Microsoft and document assembly for licenses; Nov. 7, 2007 and Red Hat; and Nov. 28, 2005 regarding transfer revenue from IP.).

A previous post refers to data about the aspirations of UK general counsel to belong formally to their companies’ boards of directors (See my post of Nov. 12, 2007.). In the United States, few general counsel are members of the Board, but they attend almost all meetings, in part because they are the corporate secretary and responsible for such duties as minutes and the logistics of the Board (See my posts of Oct. 2, 2006 on the general counsel assuming this responsibility; and April 12, 2006 for three-quarters of US GCs being the corporate secretary.).

This blog has commented on other aspects of the “company secretary,” as the British call them (See my posts of March 17, 2007 for a law firm that fills that role; Feb. 14, 2007, and July 19, 2006 for vendors of related services; April 13, 2007 on reporting lines and Aug. 27, 2005 for separate functions at Cadbury-Schweppes; Nov. 1, 2005 about the necessity of that title; March 9, 2007 for a position description; as well as Aug. 9, 2006, Jan. 24, 2006, and April 22, 2007 for comments on specialized software for the function.).

Lovells, the UK-based megafirm, surveyed 180 in-house lawyers across Europe and reports that 28 percent of the UK general counsel sit on the boards of their companies, but twice that number think they should (See my posts of April 12, 2006 for an earlier survey that 40% want to be on the Board; and Nov. 9, 2006 that shows the number had dropped significantly.). The article is from TimesOnline, Dec. 4, 2007. The goal to be on the board seems odd because many more UK general counsel than US general counsel do not even report to their CEO (See my post of April 12, 2006.). Or maybe this is an end-run to more access and clout?

Boards of Directors have enjoyed their 15 minutes of fame on this blawg (See my posts of Feb. 7, 2006, Nov. 16, 2005 #1 [Raytheon], and March 1, 2007 on the general counsel reporting to the Board; July 19, 2006, Aug. 9, 2006, Oct. 1, 2006, Oct. 29, 2006, and March 9, 2007 #1 for software to assist the Board; July 25, 2005 regarding independent counsel to the Board; Sept. 13, 2005 on a Board converging law firms; April 12, 2006 about few US GCs on the Board, March 27, 2006 with arguments for that line of reporting; and May 14, 2006 #4 for some Canadian data.). Other posts refer to additional points (See my posts of Jan. 20, 2006 for the Audit Committee; Oct. 2, 2006 for self-assessment tools Boards might use; and Oct. 6, 2006 for the relationship between the GC and the Board.).