Articles Posted in Structure

An earlier post discusses the four main strategic decisions a general counsel can take (See my post of Feb. 10, 2007.). Other strategic decisions that affect a law department might be made over the objection even of the general counsel.

To sell or buy a major business unit, to form a shared services organization (See my post of Dec. 31, 2 2006 on shared services structures for law departments.), to go public or private, to sweepingly reorganize the business units, to outsource a major function such as information technology – these company-altering decisions pull the law department in their wake. Each large-scale decision reverberates through the law department’s structure, responsibilities, position relative to other staff groups, and staff allocation.

Whether by design or not, I thought this blog had made little room for items on the physical layout of law departments, but in fact this blog has been building quite a structure. Here is a blue print of what posts have been erected.

A scattering of remarks concern conference rooms (See my post of April 8, 2005; May 7, 2006 about Computer Associates.), but there is lots of capacity available on cubicles (See my posts of Nov. 19, 2005; March 21, 2006 about not even cubicles at Sun; and Feb. 20, 2007 about open layout organizations.). Much more is out there than I have covered on ergonomics (See my post of April 23, 2006 on ergonomic considerations.).

Here and there are posts on other aspects of physical layout (See my posts of Nov. 8, 2005 about SEI and mobile desks; May 7, 2006 on Computer Associates and its offices; March 23, 2007 about offices and morale; May 3, 2007 on hoteling; May 4, 2007 on the shrinking of office sizes; and March 23, 2007 on proximity and communication.).

The general counsel of a large corporation may have to travel quite frequently for transactions and other business purposes. But what if that top lawyer has responsibility for lawyers who are posted in distant offices?

According to the Bisnow on Business E-Letter, May 2007, Marriott International has in-house attorneys in Washington, DC; and Orlando, Florida as well as in London, Zürich, Dubai, Mumbai, Singapore, Hong Kong and Beijing. The peripatetic general counsel of that company makes it a point to travel at least once a year to each of these legal offices. Buy a passport extension!

InsideCounsel, May 2007 at 66, profiles Beat Hess, the global corporate counsel of Royal Dutch Shell. That $220 billion company, the world’s third-largest oil company, has a 700-attorney legal team. Given that humongous number of lawyers, no wonder Hess has established a “one team” legal model, where he set common goals for the international legal team.

What awed me, however, was that as part of integrating the energy behemoth’s army of lawyers, Hess “relocated half of the attorneys from the London office to the legal headquarters in The Hague.” I strongly favor putting lawyers near their clients, but that may have been a massive – and costly – implementation of that belief(See my post of June 7, 2006 about BHP relocating some lawyers.). Such a large move runs the risk of losing good talent who decline to relocate.

A study of French law departments, conducted by Juristes Associes in 2006, included almost 100 legal departments (See my post of May 6, 2007 for some other findings.). Of that group, 64 percent had between one and five lawyers; 23 percent had between 6 and 10; 12 percent 11 to 25; and two percent had more than 100 lawyers. That distribution of law department sizes probably holds fairly true in the United States, and perhaps in a number of other developed countries. Over half are very small, while at least three quarters of the law departments are of modest size – ten or fewer lawyers (See my posts of Aug. 26, 2006 on large law departments in France; April 13, 2006 on in-house UK lawyers; Oct. 19, 2005 #2 on in-house lawyers in China; and June 30, 2006 for Australian metrics.).

Reflective of a different educational system in France for lawyers, the survey notes that 69 percent of the in-house counsel have a troisième cycle postgraduate degree, 11 percent have passed the bar exam and 16 percent have a maîtrise. For moi, that sentence and those credentials has more than a soupcon of je ne sais quoi.

A panelist at a conference where I recently spoke mentioned three arguments in favor of her company’s geographically dispersed law department. With a trio of far-flung locations, the lead lawyers have discovered that it is easier to recruit when drawing on the labor pool of three different locations. While it might be hard to bring someone to a one location, an office in a major metropolitan offers more to choose from.

The second advantage, she said, involves business continuity. Were a disaster to befall one location, much of the legal work could continue from the other two locations (See my post of Aug. 28, 2006 on crisis planning.). And third, since the lawyers in each city encounter partners from local law firms, the law department as a whole can choose external talent from a larger watershed (See my post of Nov. 25, 2005 on geographic decentralization and structure; May 5, 2006 on Convergys and its three lawyer locations; and Nov. 13, 2006 on co-location of lawyers with clients.).

A survey for office furniture maker Steelcase, summarized in BusinessWeek, April 9, 2007 at 12, polled 9,300 white-collar workers. Their data reveals that “the typical private office has shrunk from 16 by 20 feet a few years ago to a more common 8 by 10 today.” I suspect the same scaling-down has affected the office sizes of inside counsel.

Information is sketchy on the architecture of in-house counsel offices (See my posts of Feb. 20 and Nov. 19, 2005 on cubicles for lawyers (“open plan” for British readers); May 3, 2007 on temporary offices; Nov. 8, 2005 on movable desks at SEI; and March 23, 2007 on office proximity and interaction.). The reason may well be that general counsel have little say in the layout of office space. There is also talk from time to time about having all offices of the same size for the lawyers of inside teams.

Oh, and one more comment on space usage. “The study found that most of us make our offices even more cramped by piling papers, rather than filing them.” But how then do we show we are busy?

A statement in Bus. Week, May 7, 2007 at 71, ought to astonish us all: “About 60% of the office space that companies pay so dearly for is now a dead zone of darkened doorways and wasting cubes.” On any given day, how many offices of legal departments sit empty as their occupant travels, telecommutes, roams the halls of clients, spends time at a law firm, or works on a flexible schedule?

The solution for many companies, as described in Business Week, is to turn to companies that provide for short periods professional-quality offices, with all the amenities of receptionists, conference rooms, lounges, and cappuccino makers. With companies like Britain’s Regus Group PLC, where offices are available in 950 locations in 400 cities around the globe, the model – pay for it if you use it on such things as video conferencing and support services – can “typically save about 30% over a permanent office.”

Notwithstanding cubicles for a few lawyers, the day has not come when law departments will shift from assigned offices to temporary, offsite hotelling. But the opportunity to forego the associated costs of using offices of expensive law firms – small items like associate rates – could be valuable for such variable and unpredictable uses as onsite discovery teams, M&A due diligence work and trials.

Data from a recent study by LexisNexis Martindale-Hubbell deserves a quizzical quantitative qualifier. The study focused on how midsize companies in Europe select and review their legal service providers, and is reported in Of Counsel, Vol. 26, March 2007 at 8. The study defines “midsize” companies as for-profit organizations that employ approximately 50 to 600 full-time employees. One of its findings is supposed to excite amazement.

“According to the study, a surprisingly large proportion of European midsize companies have no dedicated internal legal department, with only 30 percent of respondent organizations employing in-house lawyers.”

Is that finding jaw dropping? The median number of US attorneys per 1,000 US employees in large law departments is 1.5 (See my post of Jan. 27, 2006.) so if that metric holds even approximately among European midsize companies, even the largest respondents in the LexisNexis study would have had but one lawyer. Yet the survey population included 78 companies (41%) with only 50 to 100 employees, 61 (31%) with 101 to 250 employees, and only 55 (28%) with more than 251 employees. With such a heavy bias toward small companies, if the benchmark holds then very few companies would sustain an internal lawyer.

A profile of Peter Bevan, group general counsel of British Petroleum for the past 15 years, which ran in Law Dept Quart., Vol. 2, May-July 2006 at 41. The profile states that there are approximately 400 lawyers worldwide in BP’s group legal function.

More pertinently, “The lawyers are based in 36 countries worldwide” and “Individual sub-teams vary in size from one to over seventy lawyers.” Note that the term “sub-teams” may or may not refer to the number of lawyers in those countries, let alone individual locations. But BP must have at least 36 offices with lawyers. Another example of a heavy sprinkling of international offices, drawn from Met. Corp. Counsel, Vol. 15, Feb. 2007 at 31, is the law department of Aon Corporation. david_cabria@aon.com Aon scatters approximately 250 professionals in 17 countries (See my post of April 17, 2007 about J&J with its 35 lawyer locations; Oct. 19, 2005 on Goldman Sachs and 90 lawyers outside the US.).

International offices raise many management issues. They include purchase power parity determinations of compensation (See my post of April 22, 2007.); ex pat pay and relocations (See my post of Oct. 10, 2005.), extensive travel obligations for the general counsel, use of local law firms and lawyers who are not native speakers of your language (See my post of April 26, 2006.), currency conversion (See my post of Sept. 5, 2005.), and compliance with local requirements about invoices and their data (See my post of April 22, 2007.).