Articles Posted in Talent

The Economist, Jan. 2, 2010 at 55, reviews various points on procrastination. Why we tend to put off doing something often has to do with our magnified sense of the cost of doing a task now as compared to in the future. One idea for a way to alter that initiative calculus and nudge people to stick with a promise to act is the “commitment contract.”

Let’s create a few to illustrate the technique. Each of the lawyers in a legal department who manages outside counsel and approves payment of significant amounts of invoices puts $1,000 into an account. If at the end of six months 95 percent of their major matters have a budget, they get the money back; if not, the money goes to charity. With another commitment, if at the end of a year, less than a third of their matters are under some form of alternative fee arrangement, they forfeit the money to charity. When we increase the costs of inactivity, people are more likely to act.

This approach, as is apparent, does not increase the budget of the legal department. Whether employment laws permit it is beyond my knowledge.

Those who speak and write about legal department management should try to do so without jargon, with words pragmatic and clear. The opposite of that style means nothing definite comes through, that you hear the words but can’t understand their meaning. An egregious example bagged from Practical Law, Feb. 2010 at 96 helps.

Asked the “single most challenging issue that in-house lawyers are likely to face over the next two or three years,” one general counsel projected increasing demand for legal services while resources and budgets are tight. Do more with less, in brief. As to the solution to this challenge, the Orwellian fog rolled in.

“In-house lawyers need to build an operating model for strategic flexibility so resources can be proactively reallocated to focus on highest priorities and emerging trends and needs.”

Talk about a risk of bias in survey data! A survey by administrators asked a group of law department operations managers in US legal departments “How much do you think your company’s legal spend would increase without a legal department operations position?” In other words, how much are you worth to your company? The results from the Second Annual Law Department Operations Survey at 6 should not surprise us, but the grandeur of the amounts should.

A third of the respondents thought that legal spend would otherwise rise 15-29 percent and a quarter, less modest, saw spending without their oversight would soar 30-59 percent. Goodness gracious!

How might that translate into dollars and ROI? Assume the average size of the legal departments for the surveyed group was 20 lawyers, which is probably much too small but a department has to be of some heft to support such a position. If we further estimate a million dollars of total legal spend per attorney, then the total spend would be $20 million. Saving somewhere between 20 and 35 percent of that amount – which is very roughly what half the respondents projected, would mean savings of $4 million to $6 million.

A profile of James Lipscomb, the general counsel of MetLife, ladles out an endearing accomplishment of his department. According to Columbia Law School Mag., Winter 2010 at 63, the department seeks to serve up an “inclusive” office atmosphere. “For instance, the employees initiated ethnic food tastings – an endeavor that has resulted in a law department recipe book.”

Eat your heart out, you other legal departments, and consider this post and its ample portion of engagement food for thought! Those who break bread together work well together (See my post of Aug. 10, 2007: lunch with clients.).

In Britain, it is not uncommon for a junior lawyer from a legal department to spend some time with a law firm, especially to gain litigation experience. An example comes from Law Bus. Rev., Winter 2009 at 30, which cites MITIE doing such a reverse secondment with Burges Salmon (See my post of Oct. 26, 2005: reverse secondment of paralegals; June 13, 2006: bilateral secondments; and Aug. 18, 2008: BT honors two-way secondments.). A trainee lawyer from the department took part in the arrangement.

The permeable interchange of lawyers illustrates another form of partnership as well as intervention (See my post of July 17, 2008: secondment with 12 references; Jan. 23, 2008: secondments with 8 references; and Aug. 11, 2009: secondment arrangements with 10 references.).

My understanding is that the standard charge of executive search firms that place a candidate is on the order of a quarter to a third of the lawyer’s first year compensation. Or, at least that was the range back in the palmy days. Whatever the charge, it mostly applies to more senior lawyers.

Junior lawyers can be recruited through many other means, but not for free (See my post of Sept. 22, 2009: ways to find lawyers for openings other than search firms with 17 references and 1 metapost.).

What, then, is a typical cost of recruitment if a search firm does not get the mandate? I read in a report a figure of “2% of total salary” but I do not know whether that figure holds water. It should cover a trip in for interviews, some job posting fees, perhaps a signing or moving bonus, but what other out-of-pocket expenses? That small percentage cannot include the value of internal time on recruitment.

The Harvard Bus. Rev., Vol. 88, Jan.-Feb. 2010 at 104, has an intriguing study of the “best- performing CEOs in the world.” I wondered how many of them have outstanding general counsel at the helm, but when I searched among my 5,000 posts, I found almost nothing about the legal departments of Apple, Samsung Electronics, Gazprom, or Reliance Industries – four of the top five companies whose CEOs were lauded.

Disappointed on that score, I did salvage something. The analysis of 1,999 CEOs showed that insiders promoted to the top position tended to do better with their company’s performance than outsiders hired in. “On average they [internal promotes] ranked 57 places higher than outsiders in the full list.” It would not surprise me to learn that internally promoted general counsel lead their departments to more success and effectiveness than general counsel who parachute in from another company or law firm (See my post of Jan. 4, 2006: If the law department needs shaking up, hire a general counsel from outside; and Feb. 19, 2006: higher pay for the external GC hire than the internal GC.).

Asian-Counsel, Vol. 7, Oct. 2009 at 19, mentions an “Asia-Pacific Head of Legal & Compliance for a European asset manager” whose company conducted an “employee staff engagement survey” to identify the kinds of issues that were of concern to employees.

Only if you have a very large and dispersed legal team does a survey make sense. Or, as in the cited example, if you can ride on the coat tails of a broader, company-wide survey. Far better to listen to people around you, ask questions, and keep your eyes open (See my post of July 13, 2008: employee morale with 15 references.). You could also try a focus group to gather feedback quickly and with nuance.

Int’l In-House Counsel J., Vol 2, Summer 2009 at 1301-02, argues that chief legal officers should lead recruitment even for lawyers based with business units and yet also involve the local executives the new lawyer will support.

“A first cut of interviews will be done with the head office legal department via videoconference. Second interviews are often done by head office legal in the market. Final interviews are often done at the head office location, flying one or two candidates in for meetings with senior legal department and business officials. Interviews with local management take place just before the final interview stage, but after the legal department has conducted second interviews.”

Hence, in this view, the legal team has a first crack at new hires. The managers who will rely on the new lawyer weigh in later.

Hildebrandt Baker Robbins, a unit of Thomson Reuters, shared some data from its 2009 Law Department Survey on cost control strategies. The survey found that 73 percent of the companies have no plans to increase the use of contract/temporary staff. Only 13 percent have increased the use of contract/temporary staff while 14 percent are considering this option (See my post of Sept. 9, 2008: temporary staff with 8 references; and July 17, 2008: contract lawyers with 12 references.).

Once again, large-scale changes in how general counsel manage their legal teams seem not to be underway or imminent. Even where legal departments have “increased the use of contract/temporary staff” the cause may be unrelated to the economic downturn. It may be a planned, short-term expedient. We cannot know from the data.