Articles Posted in Thoughts/Observations

Economists often refer to changes that are cyclical, meaning that there is some regularity in the pattern of change and reversion, and changes that are structural. Structural changes are permanent, profound, often take effect gradually, and are sometimes hard to identify at the time. For example the demographic change of an aging population appears to be a structural shift, one that is much more permanent and deep than a cyclical swing.

For law departments, some management ideas are cyclical. I suspect that decentralization of reporting ebbs and flows in popularity. Convergence may be a cyclical swing of the pendulum as might partnering and a strong focus on cost control.

Structural changes that will affect law departments may include a shift in power and influence away from law firms. Over a number of years, off shoring may prove to be another structural change as well as unbundling services and third-party investments in law firms. Perhaps US style litigation is a structural change that will ripple out from our shores. Some people forecast that technology will transform the practice of law (See my post of Sept. 25, 2008: Cisco’s Mark Chandler with 30 references.).

More than 20% of Canadian lawyers are in-house. CCCA Magazine, in its Fall 2011 issue at 7, has a piece by the Chair of the trade group, Geoffrey Creighton. He writes that “more and more legal practitioners in Canada are working as in-house counsel” and a sentence later that “Some estimates place the figure as high as 25 percent of the profession.” That proportion would be higher than comparable estimates for the United States, although the number of in-house counsel in Federal, state and local government agencies is hard to come by. Creighton says that of the 400,000 member American Bar Association, those who are in-house number 17,000 (See my post of Sept. 25, 2005: ACCA estimate of 71,000 non-governmental U.S. in-house lawyers; Dec. 3, 2006: possible Fortune 500 staff figures; Dec. 11, 2006: ratios in the State of New Jersey; Dec. 31, 2008: oblique data suggests about 21% in-house; March 9, 2009: ABF data suggests 11% in-house in the US; April 2, 2009 #3: rapid growth of in-house bar since 1961; and June 15, 2009: almost one out of five lawyers in a large survey had gone in-house by their seventh year of practice.).

Another online RFP site. Announced during a law department conference in Asia was the “imminent launch” of LIVS (Legal Insight Visibility Services & Systems) a new, secure and stream-lined legal procurement system for RFP’s. This news comes from Asia-MENA Counsel, Vol. 9, Issue 7 at 16 (See my post of Sept. 4, 2005: online Dutch auction by GE with 142 law firms invited.).

More on estimates of the legal market, whatever that is. In a report dated June 2010, Jomati Consultants states that the “American legal market” stands as the largest in the world at around $255 billion (See my post of Oct. 28, 2011: the global or U.S. legal markets and three citations.).

A company that provides communications tools for major litigation. For the Defense, Aug. 2011 at 75, has an ad for TrialWorks. It promotes its case management software and promotes its connectivity services, including skype, iChat, video teleconferencing, instant message, text, email, webinar, fax, and phone. The site does not call out any law department clients, but they must exist.

Another way to cluster companies for benchmark comparisons. An article I just read used the four-digit GICS code “because it has been shown to explain many financial results better than SIC codes and NAICS codes” (See my post of Dec. 27, 2010: use codes to create finer distinctions than “industry”.).

It is not possible to define numbers formally. This axiom-based inability has no bearing on the importance of metrics, but it fascinates me that “providing a univocal formal definition of what we call numbers is essentially impossible: the concept of number is primitive and undefinable,” as explained more fully in Stanislas Dehaene, The Number Sense: how the mind creates mathematics (Oxford 2d ed. 2011) at 224-225 (emphasis in original). Fortunately, our calculating minds don’t rely on axiomatic definitions.

Astonishing news, this. Bloomberg announced yesterday that five partners (partners!) from Willkie Farr & Gallagher will become part of the existing Bloomberg legal team, effective January 1, 2012. One of them, Dick DeScherer, will become Chief Legal Officer.

I can’t fathom the economics and logic of this massive move. Here is the bland statement in the release. “As a growing company operating in almost 200 locations around the world, we are finding unprecedented opportunities for growth in our customer base, our product offerings and our local partners. Bloomberg will benefit greatly from a ramp-up of both the number and range of expertise of in-house legal staff to ensure we are much more efficient and nimble as we seek to take advantage of these global opportunities” said Bloomberg CEO Daniel L. Doctoroff.

The release adds that “Willkie Farr & Gallagher has been Bloomberg’s primary outside legal counsel since 1987 and DeScherer has worked with the company during the same time period, serving on the Bloomberg Board of Directors for more than 25 years — a role he will continue.”

Spot awards not appropriate for lawyers? I heard the view that spot bonuses are not appropriate for lawyers. “It’s not a very professional way to deal with lawyers!” I don’t agree. Since promotions are rare and turnover low, general counsel need some treats in the bag to hand out (See my post of Nov. 8, 2007: on-the-spot awards; and July 28, 2008: hard decisions to award spot bonuses.).

Total amount of spending by law departments. Ken Cutshaw’s column in the ACC Docket, Sept. 2011 at 22, refers to “the $60 billion global legal services market.” I wrote Ken but he has not supplied the backup for that number. kcutshaw@churchs.com Then I read in the brochure for the Litigation Summit and Exposition, to be held Nov. 15-16, 2011 at 9: It is estimated that Fortune 500 Companies spend more than $200 Billion a year on litigation.” No source given and no believability possible (See my post of March 29, 2009: “The US corporate legal services market generates $96B per year in spending.”).

U.S. decisions reported each year. According to Legal Comm. & Rhetoric, Fall 2011 at 100, n. 40, there are “200,000 new American cases reported each year from 600 courts.” Need we say more about the constant development and the likely increasing complexity of the law? Yes, because some decisions clarify, simplify, and resolve areas of law (See my post of Feb. 16, 2006: more than 4,000,000 state and federal decisions.). Even so, the deluge of decisions awes us.

This sentence from 2008 regarding Australia startled me. “Of the estimated 50,000 lawyers currently in practice throughout Australia, around a quarter are employed in-house.” One out of four? That seemingly high ratio comes from Benny Tabalujan, ed. Leadership and Management Challenges of In-House Legal Counsel (LexisNexis Australia 2008) at 3.

In the United States, estimates of the ratio of in-house corporate lawyers to private-practice lawyers run around one to sixteen (approximately 70,000 to 1.2 million). I am not familiar with any estimates of Federal, State, and local government lawyers. On reflection, however, legal staffs are enormous in the myriad federal agencies; then add even more for state counterparts; toss in thousands who are in prosecutor’s offices and local government and perhaps one quarter of the lawyers in practice being internal is not so far-fetched.

And, since you asked, if Australia averages about three lawyers per law department, does the sentence suggest something like 4,000 law departments in the land of ‘roos (1/4 of 50,000 divided by 3)?

For more consistency, have the administrator oversee evaluations of non-lawyers. When paralegals and support staff report to the administrator of a legal department, with input from the lawyer leading the team they support, the greatest benefit is consistency in performance objectives and measurement. The head of operations can calibrate across roles and compensation bands to bring more balance and internal equity to the evaluations (See my post of March 26, 2005: risk that non-lawyers reporting to lawyers become second-class citizens.).

There can be no such thing as an ultimate explanation. David Deutsch, The Beginning of Infinity: Explanations that Transform the World (Viking 2011) at 64, makes that claim because the resolution of any problem makes us aware of deeper problems. If a general counsel believes that competition drives most people’s fundamental behavior – that they strive to advance relative to others – that cannot serve as an ultimate explanation. What explains competition and why not another foundational driver? This notion relates to mental models (See my post of Sept. 10, 2005: mental models and decisions; and June 6, 2006: mental models are closer to theories.).

Australian Corporate Counsel Association predates ACC by two decades. Benny Tabalujan, ed. Leadership and Management Challenges of In-House Legal Counsel (LexisNexis Australia 2008) at 8, points out that “With its origins in the 1960’s, ACLA was one of the first fully dedicated in-house lawyer member organisations established” (See my post of Oct. 5, 2009: ACC’s predecessor formed in 1981.).

Neuroscience and creativity. “We now know that moments of insight come from a particular circuit in the back of the right hemisphere of the brain called the superior anterior temporal gyrus.” Rotman Mag., Fall 2011 at 76. Aha, I get it, I finally get it! (See my post of Jan. 28, 2011: neuroscience and brainstorming.).

The story on narrative effectiveness. “Research has shown that people process information best when it is presented in a story or narrative format, ” writes Rotman Mag., Fall 2011 at 104. That reminds me to tell you a tale of narratives and stories (See my post of May 15, 2005: myths of change management; Jan. 17, 2006: strategic narratives in place of strategic plans; July 14, 2006: narratives, theories, and models; Sept. 21, 2009: neuroscience of stories; and May 4, 2009: stories with 6 references.).

Explanations, reach and hardness. David Deutsch talks often about a good explanation being hard to vary, which means they are most constrained by current knowledge. David Deutsch, in The Beginning of Infinity: Explanations that Transform the World (Viking 2011) at 25. Changing the details would ruin the explanation. He also makes much of reach: a comprehensive, indeed universal theory, hard to vary, has reach (at 29). It goes beyond the problem it meant to solve.

This blog has cited at least four German law departments, and refered elsewhere to Germany several times. A huge amount of managerial creativity and practicality in that economic powerhouse has gone uncovered, therefore, which I wish were not the case.

Send me news about German law departments (See my post of Jan. 27, 2006: Siemens CEO rose from general counsel position; Jan. 14, 2007: Daimler-Chrysler and staff reductions; Jan. 12, 2009 #3: Germany’s loser-pays rules; Feb. 18, 2009: Robert Bosch’s century of a law department; Feb. 18, 2009: Bosch’s IP department; March 15, 2009 #3: ISDA documentation by Deutsche Bank; May 11, 2008: Deutsche Bank’s Walker came from the SEC; Sept. 21, 2009: DeutscheBank and outsourcing; May 31, 2010: comparisons of total legal spend among French, German, Italian, and UK participants; and Feb. 9, 2010: 20% discounts but a clawback bonus expected for successful projects.).

I now add Germany to my list of country accumulations (See my post of April 14, 2011: departments in Canada with 28 references; and May 24, 2010: departments in China with 10 references.).

1. Cargill (See my post of Aug. 9, 2011: Cargill with 7 references.).

2. Drivers of legal investment, company attributes, influences on law department size (See my post of Aug. 15, 2011: what defines companies better than industry with 11 references and 2 metas.).

3. Intel (See my post of July 30, 2011: Intel with 6 references.).