Articles Posted in Tools

Going against the wave of offshoring, General Electric’s law department has begun to handle many more patents in-house, “a change that produces more and better patents with no increase in expenses.” No more details are in the article from Corp. Bd. Mbr., Vol. 11, July/Aug. 2008 at 76, that describes this shift, where the company had previously been outsourcing its work on patents.

Brackett Denniston, the General Counsel of General Electric and the quoted speaker, believes that a great technology firm, which GE aspires to be, should have a law department that is as “good or better than anybody in the world and can do the intellectual property that protects the technology.”

That is to say, you do not send offshore your core-competency work (See my post of May 23, 2008 – core competencies with 12 references.).

Puzzling over the data from a survey where law departments rated the performance of their law firms, it occurred to me to make a point of methodology (See my post of July 21, 2008: survey methodology and 48 references cited.). The article, from Inside Counsel, July 2008 at 47, explains that 548 in-house counsel responded to the survey. What it does not say he is how many of those respondents answered specific questions.

I have no reason to doubt that the question that shows that in-house counsel have given fewer A grades each year since 2006 elicited responses from significantly fewer of those 548 respondents, but it is possible. For that reason, the best survey methodology for reporting data is to indicate the so-called “N” – number of answers to the question – for each question.

Surveys of law departments frequently have multiple-choice questions, even though such questions are beset with methodological traps. Here are my blog posts on the topic.

Strive to cover every reasonable choice and not have choices overlap (See my post of June 16, 2007: the test of Mutually Exclusive, Comprehensively Exhaustive.). To do so, selections need to be defined tightly and worded carefully. Recognize that some plausible choices are likely to have been omitted and cover them with a selection for “Other” (See my posts of April 12, 2006 and July 14, 2005: importance of “Other” as a choice.).

The wording, number, and order of the choices make a difference. List selections neutrally, such as alphabetically, and make no effort to influence people by the order of choices (See my post of Dec. 20, 2005: the order of questions.). Avoid disjunctives such as “Knowledge of industry or experience” since you can’t untangle the combined concepts. Limit any one question to no more than seven or eight selections, since the number of selections has an effect on how people answer them (See my post of Nov. 13, 2006: decision difficulties when there are too many choices.).

During a presentation recently, the finance manager of a large law department mentioned that in 2007 his company’s internal audit group had reviewed the legal department’s processes. He proudly added that internal audit gave the department a “strong” rating.

If you want headaches, invite internal audit to look at your processes for invoice approval and reporting. They can conjure up all manner of risks and prescribe all manner of onerous checks and counter-checks.

For example, the person who approves a bill should not be the person who enters the bill’s information into the matter management system. The person who approves the bill should approve the bill after the information has been entered into the matter management system. Approval levels need to be scrupulously observed and there must be adequate written documentation about the terms of the retention. Accruals must be accurately updated every month. On and on.

Some law departments, usually larger ones, prepare a strategic plan (See my posts of May 14, 2005: tools execs use to improve the performance of their organizations.). Various techniques help general counsel craft a strategic plan (See my posts of Dec. 9, 2005: scenario thinking; Dec. 9, 2005: the Delphi method (nominal group technique); Dec. 20, 2005: real options analysis; Nov. 25, 2006: brainstorming; and Dec. 21, 2005: work analysis.).

I am all for managers of law departments thinking long and hard about their current resources compared to their anticipated needs. If that is strategic planning, then go for it! What I question are elaborate processes, PowerPoint, meetings of teams, and formalization of the output in large binders. I have expressed my doubts about the efficacy of elaborate strategic plans (See my posts of Oct. 10, 2005: defects in execution often drag down strategic plans; Dec. 15, 2005: “law-department strategic plan” is an oxymoron; and Jan. 17, 2006: strategic narratives in place of strategic plans.).

In general, the term “strategic” has been sorely overused (See my post of June 11, 2008.).

Among the 16 tools for reducing costs I posted on recently were “rightshoring and outsourcing” (See my post of May 18, 2008: Oliver Wyman’s list.). Presuming that “rightshoring” means offshoring, I rummaged around and found a plethora of earlier posts on offshoring.

For me, outsourcing is a broader topic, having to do with law departments retaining an external provider to do something. Only when the law department hires people in a low-cost country to do the work should the department use use the sub-set of outsourcing, offshoring (See my post of April 27, 2007: outsourcing does not equal offshoring.). Others apply different terms, as in the quote below.

Legal process outsourcing [LPO], according to a provider in Met. Corp. Counsel, Vol. 16, June 2008 at 20, “involves sending domestic legal work (e.g., litigation document review, contract drafting, legal research) abroad to be performed by foreign attorneys, who are billed at a much lower rates than their American counterparts. Most LPO providers … use India as their offshore hub, which offers additional advantages such as a surplus of legal talent, a legal system based on British common law, and a time differential with the U.S. that allows for a U.S./India round-the-clock legal operation.”

The needs and desires of many people ought influence managers of a law department when they select department-wide software. For example, the law department of Saint-Gobain Corporation, whose 43 employees are part of the $60 billion Compagnie de Saint-Gobain, need to replace its document management package. The department, sensibly, created a representative project team.

As recounted by the administrator of the department, in Met. Corp. Counsel, Vol. 16, June 2008 at 51, she assembled a team to help her evaluate the extant solutions. “Our team was comprised of seven people: myself plus one attorney and one paralegal/or assistant from each of our department’s three main practice areas.” The team created a wish list for the new document management system and then retained a consultant to help them identify and review candidates. Some teams would have assigned a technical person from within the company.

Caterpillar’s 179-lawyer department follows the problem-solving approach of Six Sigma (See my post of Feb. 13, 2008: Six Sigma and 18 references cited.). “They identify and solve problems by analyzing statistics, and measure the results to track their progress.”

An application of that discipline at Caterpillar is set forth in Corp. Counsel, Vol. 15, June 2008 at 102. The department spent several months using Six Sigma to understand their toxic tort load. They cut the number of law firms hired for those cases from 250 to about 10 and worked out a method to decide which cases can be resolved quickly and easily. The restructuring of this litigation “saves the company up to $250,000 a month.”

Sloppy use of significant terms by those who care about the management internal legal teams creates clichés and robs the terms of their punch. Five such words are particularly prone to be sprinkled too liberally.

Rarely can we say that some activity is a “best practice,” yet the over-worked term pops up everywhere (See my post of June 6, 2006: with four references.).

Not all changes warrant the accolades of “innovation” (See my post of Dec. 17, 2007.).

All manner of enterprises make a living off law departments. I term the teeming community the “cottage industry” and have picked out parts of it from time to time to highlight (See my posts of April 18, 2005; Oct. 18, 2005; May 30, 2006: the revenue that might go to companies that are part of the cottage industry). Listed below are 30 that I have addressed.

ADR (alternative dispute resolution) (See my post of Feb. 7, 2007.).

Auditors of legal bills (See my post of Dec. 4, 2006.).