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My general inclination is that secretaries should report to an administrator, if there is one, because that person can handle coverage issues, workload imbalances, and squabbling. The lawyers (and perhaps paralegals) they support should contribute significantly when it comes time to evaluate the admins’s performance and certainly direct them day to day.

Paralegals, in contrast, should report to the lawyer whose work they support, and dotted line, perhaps, to an office manager for some administrative matters.

In 2003, the American Management Association reported that about a third of the 52 public companies it surveyed had a Chief Governance Officer. The functions of that officer included “monitoring compliance with legislative and regulatory requirements affecting corporate governance, performing ongoing assessment of the Board’s structure and governance practices, [and] periodically auditing the Company’s compliance with its governance principles and policies.”

According to the report, which listed Ford, Hershey Foods, Baxter International, Eastman Kodak, and Motorola as having a CGO, the position typically reports to the general counsel, governance committee, or CEO. It also notes that “many are also responsible for Ethics & Compliance and serve as the Corporate Secretary.”

At the ACC 2004 Annual Meeting (Course 611), a Division General Counsel for TIAA-CREF, a major financial services company, deciphered this reporting mouthful. The three Division General Counsel who support business groups report solid line to both the general counsel of the company and to the leader of their business group. The corporate Division Counsel has a double solid line report also, to the general counsel and to the company’s CFO. The matrix comes from the double reporting.

In the end, there must be some distinction between the two reporting lines. Both people cannot be expected to decide compensation, titles, job responsibilities, rotations, relocations, and other matters of the lawyers co-reporting to them. Perhaps the client solid line intends to say that the lawyers take their principal work direction from the client, thus tightening alignment. (But see the privilege risk of lawyers reporting to non-lawyers, in my post of May 30, 2005; also my posts of July 11 on AXA and decentralized reporting and July 30, 2005 on dual reporting of specialist lawyers.)

A recent post of mine (August 21, 2005) cited a general counsel who contends that the last step you want to take to reduce litigation costs is to hire a litigation lawyer. He favors letting business lawyers, assisted by outside counsel, resolve claims and lawsuits.

A number of blogs picked up on that item, so I looked for metrics on the frequency of litigators in law departments. My benchmark book and some other research suggests that as a general rule, law departments that have more than ten lawyers have approximately one litigation staff person – the person might be a paralegal helping with discovery – for every 13-16 law department employees.

With the departure of the company’s chief legal officer and group secretary, this UK-based company promoted one person to the CLO position, reporting to the CEO, and someone else to the secretary position, reporting to both the CEO and the Chairman (Corp. Counsel, Sept. 2005 at pg. 68)

Splitting the previously-united function of CLO and Corporate Secretary seems odd, and is infrequent among US companies. Having the Corporate Secretary report jointly, and above the CEO – at least I think the Chairman outranks the CEO – seems odder still. The Brits may be able to explain this puzzle.

An article in the Metropolitan Corporate Counsel (James Ewing and Gerald Kral, July 2005 at 40) stated: “Organizationally, the formal compliance function most commonly resides within the CLO organization.” (See my post of May 20, 2005 questioning the linkage of law and compliance.) Agreed, but consider the authors’ rationale.

The authors defend the logic of this reporting model on the grounds that “the CLO usually has responsibility in the event of an infraction, so having compliance in the CLO’s organization creates accountability for preventing it in the first place.” Well, maybe.

Many “infractions” that compliance detects do not require legal involvement; only changes to practices and procedures need be made. More important, it is harmful to a law department to fill the sheriff’s shoes, arresting bad guys. Lawyers should focus on more strategic activities than “preventing [compliance failures] in the first place.” (See my post of May 20, 2005 about merging law and compliance.)

Most law departments these days have some lawyers dedicated to business units and the others, legal specialists like litigators, employment and environmental lawyers, support them. Should those specialists report to the head specialist lawyer – the AGC Real Estate Law – or to the head business unit lawyer – the AGC Widgets? Dual reporting is another choice, and one I favor.

For example, trademark lawyers in Europe might co-report to the company’s head TM lawyer and to the head business lawyer in Europe. This makes sense.

But the law department must state clearly what it means to “co-report.” Who prepares evaluations? Who decides on bonuses? Who decides to change titles or relocate someone? Who can fire a bad performer? In general, the nearest person directs day-to-day activities and priorities, while the other supervisor (the head specialty lawyer) manages professional development, quality, and the personnel functions.

At a consulting client, the paralegals and the secretaries in the different practice groups report directly to the lawyer heading the group. One of them, overseeing a dozen or more lawyers, has more than 20 such staff reports!

Inefficient is the mildest term for this misuse of senior lawyer time.

Paralegals ought to report to the lawyers they support directly, not to a higher level lawyer. Secretaries ought to take day-to-day direction from the lawyers they support (and from paralegals working for those lawyers, by the way), but should report to the Administrator for purposes of evaluations, vacation clearance, workload distribution, development and other purposes. [See my post today on the changing distribution between paralegals and secretaries.]

For a recent consulting project, I used these two shapes to describe on the non-lawyer side how law departments are changing composition. The older model had many lawyers, a few paralegals, and many secretaries – the hourglass. Progressive law departments these days are hiring more paralegals, rafts of them sometimes (such as at Rouse), and are shedding secretaries as lawyers resort mostly to email and telephone as well as holding down lawyer headcount – bulging more in the middle and slimmer at both ends, the almond.

Re-jiggering staff in this way makes sense. Paralegals can be highly productive yet much less expensive than lawyers. Secretaries, or at least the 20th century version, are a breed at risk of extinction as travel agencies nibble away what they used to do, online calendaring helps with scheduling meetings, PDAs become ubiquitous, no one writes letters, and the talent pool dries up.