Articles Posted in Talent

The Law Department of the City of New York uses “hand geometry” scanners known as CityTime. The website of CityLimits.org #629, March 3, 2007, explains that the Ingersoll-Rand Hand Punch 4000 units clock workers in by reading the specific geometry of their hand.

At least a dozen city agencies, comprising some 13,000 workers, are now using biometric time clocks, and another five agencies will do so by summer 2008. The program will eventually include 80 agencies and 160,000 city employees. For non-exempt employees of the law department, this new technology holds out promise of greater accuracy and reliability (See my post of June 6, 2006: Cargill’s law department and fingerprint identification.).

Here is the stumper of the day, a devilish question submitted to Gertrude Block, who writes a column called “Language Tips that appears in the NYSBA J., Vol. 80, Feb. 2008 at 54.

“Isn’t it incorrect for a lawyer who is not a member of the corporate law department of the corporation, but who was hired by the human resources department as vice-president of compliance, to send out memoranda and e-mails both internally and externally, identifying himself as “Esq.?””

The esteemed Ms. Block, a lecturer emerita at the University of Florida College of Law, deferred to her readers as she feels this is “a matter of professional etiquette.” My take is that this is a matter of personal enmity.

Drawing on data from the most recent Hildebrandt benchmark survey, InsideCounsel, March 2008 at 59, lists the highest paid practice areas for in-house attorneys.

Trademark Litigation $258,200

International $242,000

Cash compensation for the top four levels of legal department lawyers appear to decline from level to level by about a quarter. Eyeballing the figures in InsideCounsel, March 2008 at 56, it looks like the “General Counsel” level’s $564,000 in median cash compensation declines to about $380,000 for “Deputy General Counsel,” down to about $300,000 for “Section Head,” and further to $230,000 for “Senior Counsel.” The exact figures for the last three levels do not appear.

Even with estimates, each step down suggest that median compensation – excluding the value of stock options, grants and other perquisites – falls 25 percent from the level above. From a chart on page 58, it appears that much of that gap comes from differences in the amounts of bonuses. To give one example, for the typical general counsel, the bonus makes up 40 percent of total cash compensation. For deputy general counsel, bonuses account for about 33 percent of total pay.

If the shrinkage rate of about 25 percent of total compensation continues, then the most junior lawyers in US law departments would have median cash compensation of something like $180,000. No wonder in-house counsel push for promotions.

Organization charts barely rank when you list what’s important about how to run a law department, but they also serve who only box and line. It is still useful for general counsel to be able to depict their legal team and they need not unthinkingly accept how the chart looks. It is possible to enhance org charts significantly and here are some ideas.

1. Include email, fax and cell data about each person or insert a hypertext link to that information.

2. Draw on social network notions of including additional information about the person, such as a self-written bio. One law department I have worked with lets people put in a compilation their favorite movies, records, and super powers they wish they had.

It seems plausible to me that there is a correlation between average profit margins of industries and average in-house pay (See my posts of March 24, 2005: differences between industries; and April 8, 2007: highly-paid practice areas.). Companies in industries that earn more as a percent of revenue than other industries ought to be able to pay more (See my post of July 14, 2005 on COLA differences within industries.).

Perhaps some industries have a low law metabolism, a slower pace of business and hence legal change. The body of insurance law is worn smoother than that of telecommunications law. The high-growth, exciting industries or companies attract better talent and pay them more. Counter to that speculation, however, is the likelihood that high-growth companies award stock options in place of salaries and bonuses (See my post of April 8, 2007 on highly-paid practice areas.).

Perhaps lawyers who have practiced longer are attracted to certain practice areas, those that take longer to master (See my post of June 12, 2005 on ten years to become expert.), are higher paid, and are somehow more likely to be found in certain industries? Practice specialty is a significant compensation differentiator. For instance, an Altman Weil compensation study found that securities law specialists earned a median salary 21.8 percent higher than the national median, with IP lawyers next.

Spectra Energy Corp., a huge natural gas transmission company, recently spun off from Duke Power. When that happened, Spectra’s legal team had 19 attorneys and 12 support staff in five offices throughout the U.S. and Canada. As a result of no longer being able to call on Duke Power’s corporate legal resources, such as for securities and environmental advice perhaps, the new department added three more attorneys.

Based on these numbers, as reported in Exec. Legal Advisor, Jan./Feb. 2008 at 31, the separation of that business unit from the mother-ship necessitated a 16 percent increase in lawyer headcount. It would not surprise me to see similar increases in the law departments of other spin-off companies (See my post of April 9, 2006: several spin offs listed.).

To translate a piece in the Harv. Bus. Rev., Vol. 86, Dec. 2007 at 101, to law departments, the point is that general counsel can set targets for lawyers to achieve, such as the reduction of outside counsel firms to a certain number, cost savings of a certain percentage, or throughput at a defined level (See my posts of April 6, 2005 and Feb. 23, 2006: SMART goals.).

Alternatively, general counsel can decide on the behavior they wish to foster and then encourage that behavior. For example, a general counsel might urge lawyers to think through the answers to certain guideline questions before they retain a new law firm, or to keep in their mind the value of sharing information.

Target-setting is a deductive process: start with the goal and let people work back from it to figure out how to achieve it. Behavior shaping is an inductive process: guide people how to act and they will reach the proper endpoint.

The Directors Roundtable invited the general counsel of Ford Motor, David Leitch, to speak at a gathering in late 2007, and a Nat’l L.J., Vol. 30, Jan. 28, 2008 advertising supplement published his remarks. Leitch mentions that Ford, which has been losing billions of dollars a year, has slashed its salaried work force by one third. “The Office of General Counsel has not been immune from these cuts. We lost 32% of our employees in the past year alone.”

I have suggested that in-house attorneys might be safer from layoffs than the average employee because troubled companies may face more legal challenges than successful companies (See my post of Dec. 6, 2006: are law departments particularly vulnerable to cost cutting.). Still, no department is an island (See my posts of Sept.13, 2005: layoffs after mergers; and April 18, 2005: wave of cost cutting.).

Law department managers who use temporary or contract attorneys may find that one of the lawyers does great work, fits right in, wants to join the department – and there is an open position. If the law department hires the lawyer, the department may owe the temp agency an extra fee. Paul Roy, Director of Finance & Administration of Time Warner Cable’s Law Department, points out that usually the temp agency carefully provides in its contract for a large charge for those who snatch away their talent. The agencies sometimes refer to this fee as the “conversion rate.”

Typically the conversion rate is a sliding scale, with lower payments the longer the person has stayed with the law department. For example, according to Roy, at the start you see conversion-rate charges of 20-25 percent of the person’s first-year compensation, then maybe 10 percent after three months (See my posts of Sept. 21, 2005: secondments and non-hire agreements; Dec. 17, 2007: temporary and contract lawyers; July 14, 2005: temporary staffing arrangements; and Nov. 26, 2006: contract lawyers and references cited.). In other words, the cost of a temp-to-full-time conversion amounts to roughly the same as the placement fee executive search firms charge (See my posts of Jan. 10, 2006: some cost comparisons on temporary staff; April 9, 2006: contract staff versus temporary staff; and Aug. 2, 2006: Sears’ experience.).