Articles Posted in Talent

A profile in the Fin. Times, June 13, 2007 by Alan Cane, traces the career of one-time general counsel and then chief executive of Pitney Bowes, Michael Critelli. The piece dropped four tidbits.

Critelli moved in-house for ethical reasons. After Harvard Law School, Critelli litigated in private practice until age 30. “As a lawyer, however, he found his core values too often at variance with those of his clients and in 1979 joined the legal department of Pitney Bowes.” That is a provocative statement about the relationship between external litigation counsel (a barrister in UK parlance) and their clients.

Critelli was formerly the general counsel. My first reason for citing the article is that I have been collecting the names of general counsel who are promoted to the corporate corner office (See my post of March 24, 2007: promoted general counsel with 8 references).

For most law departments, the turnover rate of lawyers is much lower than that of employees elsewhere in the company. Even so, we hear quite a bit about lawyer departures, voluntarily or otherwise. Some posts here on this blog look at departure metrics (See my post of March 4, 2007: differentials in departure rates by levels; Dec. 12, 2006: low attrition rates among UK departments; Aug. 2, 2006 #1: US employee turnover; Oct. 12, 2006: low turnover rates in-house; and Feb. 25, 2009: seven percent and upwards.).

Reasons why lawyers leave departments can be positive – to accept a promotion elsewhere, follow a spouse, or shift to the business side – or they can be negative, such as under-performance, a merger, decline of a company, or a lousy boss (See my post of June 24, 2007: mismanagement is key cause of attrition; Dec. 19, 2007: inevitable loss of some talented lawyers; and Jan. 16, 2009: layoffs after mergers with 9 references.).

Whatever the reason a lawyer leaves, there are consequences of turnover (See my post of June 24, 2007: likelihood that some talented lawyers will leave the department; May 14, 2005: turnover costs of lawyers who leave; June 12, 2005: minimize losses from retirement; June 15, 2005: financial drawbacks of attrition; Jan. 30, 2006: Purdue Pharma turned to contract lawyers after job losses; Jan. 18, 2007: loss of top performers; Aug. 24, 2005: value of exit interviews; Jan. 18, 2008: general counsel are concerned about losing top performers; and Feb. 7, 2008: more disadvantages of low turnover.).

If you are a US-based company but have a sizeable contingent of Asian lawyers, do they count toward your diversity goals? I suppose not, because the idea of diversity is to have people of different attributes mixed in the same place.

Even with that, however, it must be complicated to decide if employees who are in the majority in one location will be treated as minorities in another location. Would the sole Caucasian lawyer on the Japanese legal team alter the diversity metrics of the law department (See my post of June 17, 2008: diversity with 29 references.)?

My second blook organizes almost 300 posts related to talent management. Its 201 pages are organized in nine chapters and further organized by major topics within the chapters. My organizing theme for the chapters is chronological, from when you first think about hiring someone, through finding them, paying them, on to when you fire a person and whey they leave the department.

Several friends read the draft blook and commented on posts that interested them. Their many observations are at the end of posts. The commentators include Siobhan Moriarty, currently Associate General Counsel and General Counsel Europe for Diageo PLC; Amy Gallent, SVP, Associate GC & Chief of Staff of The Hartford Financial Services Group, Inc.; Ken Bunge, who at the time he added his comments was the Managing Attorney for UTC’s law department; and John McGuckin, the General Counsel of Union Bank of California.

John died recently, and we miss him deeply. I dedicate the blook to John McGuckin’s memory.

Robert Sutton, a Stanford professor of management science and engineering, offers his advice on a case study in the Harv. Bus. Rev., Vol. 86, March 2009 at 40. His comments enlightened me about the insidious, under-estimated costs of large-scale terminations and the knee-jerk reaction to lop off the lowest 10 percent based on performance evaluations.

Citing a Bain study of layoffs at S&P 500 firms during the 2001 downturn, Sutton writes that “it took them six to 18 months to realize savings from job cuts. And, when calculating savings, most executives fail to account for the cost of recruiting, hiring, and training new people who will be needed when good times return — let alone consider the damaged morale and productivity. Those costs are often much higher than people imagine, which helps explain why the study also found that firms that made layoffs their last resort and cut the fewest employees performed better than their competitors did.” All general counsel try to protect their valued employees, and the study cited gives additional support for the effort.

Sutton continues about ways to fire staff: ‘[C]utting the bottom 10% based on performance evaluations is the worst. Most companies do performance evaluations badly; ratings often vary wildly depending on the effort put into the process, whether the evaluator likes or dislikes the person evaluated, and whether the manager is tough for lenient.” His final criticism is that “the most leanly staffed group in a law department suffers the most.” Sutton does not mention a better method for making cuts, but one is to look at the lowest value work and cut the people who do that, even if they are highly evaluated.

According to the Altman Weil 2008 Law Department Metrics Benchmarking Survey at 108, the larger the law department, the lower the median percentage of lawyers leaving the department, as a percentage of the total number of departmental lawyers. In other words, the larger the department, the better it retains lawyers. This may be another reason why total legal spending compared to revenue declines as companies grow larger.

As to the actual metrics, departments with 26 or more lawyers reported a median departure rate of 6.7 percent of all lawyers. Somewhat smaller departments, with 11 to 25 lawyers, reported double that rate: 12.7 percent. And even smaller departments, those with 4 to 10 lawyers, experienced 50 percent higher attrition rates – at 18.2 percent. On average only 12 departments filled each size group, but the pattern is clear. Moreover, the attrition figures are much higher than the sometimes-mentioned two percent attrition rates. To be sure, “leaving a department” includes those who retire, those who take better jobs in other law departments, and those who move to a business or staff unit.

The many posts on LawDepartmentManagementBlog about the ratio of lawyers per billion of revenue fall into three clusters: metrics for a specific company; explanations of what drives the metric; and wider-ranging coverage about the metric.

In the course of describing specific law departments, I sometimes mention their lawyers per billion (See my post of March 28, 2006: EMC at 7 lawyers per billion; Feb. 25, 2007: SAB Miller at 5; Nov. 11, 2007: Red Hat estimated at 15; Nov. 27, 2007: ConocoPhillips at less than one lawyer; March 1, 2008: DuPont at 7; June 6, 2006: Honeywell’s dramatic drop; and Feb. 16, 2009: FBI at 30 lawyers per billion of budget.).

Factors that influence the ratio have appeared frequently (See my post of Oct. 31, 2005: Europe and in-house privilege hasn’t decreased the ratio; Nov. 9, 2006: as size of company goes up, the ratio goes down; Jan. 18, 2007: differences between industries in lawyers per billion; Feb. 1, 2007: effect of partnering at Cummins, with 2.1 lawyers per billion; Nov. 26, 2006: effect of contract lawyers; Dec. 6, 2007: why lawyers per billion has decreased over time; and Feb. 24, 2009: intangible density may explain metrics.).

An earlier post considered self-centeredness in young lawyers (See my post of June 30, 2007: narcissism and demographic groups.). What about narcissism in a general counsel? strategy + business, Issue 54, Spring 2009 at 119, mentions that “The personality traits that lead narcissists to take control of groups are the same traits that are later associated with a range of troublesome behaviors.” Research has shown that those who think unduly highly of themselves tend to dominate groups and meetings.

Further, some of the unpalatable consequences of narcissistic leaders include “alienation from colleagues, poor performance ratings from supervisors and peers, [and] risky decision-making.” Narcissistic general counsel may squelch those who disagree with them, may pursue publicity such as speaking opportunities and awards, may favor fancy trappings, and may promote obsequious fawners.

At the top of my Gmail on Feb. 16th was a Google ad by the Law Department of State Farm! They are recruiting lawyers. When I clicked through, I read:

Legal / Litigation

Our mission is to provide high quality, consistent, practical, creative, timely, and cost-effective legal service to assist State Farm in meeting its operational and public policy goals.

The ACC Empsight Small Law Compensation Survey provides data about general counsel of law departments with fewer than 10 lawyers. The data comes from ACC Docket, Vol. 27, Jan./Feb. 2009 at 8. The Survey gives the mix for them between base salary, cash bonus, and long term incentive (LTI) amounts.

For solo general counsel, the mix last year was 62 percent base, 25 percent cash bonus, and 13 percent LTI. For general counsel in departments with multiple lawyers, the mix was 48 percent base, 19 percent cash bonus, and 33 percent LTI.

In other words, as a general counsel’s responsibilities grow to managing other lawyers, which generally means they work for larger companies, not only does the base salary grow but also the mix of compensation shifts toward more contingent recognition of personal and corporate performance.