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InsideCounsel, May 2007 at 51, chronicles the decline of arbitration in relation to litigation. The magazine cites at page 56 results from an American Arbitration Association (AAA) survey in 2003 of 254 in-house counsel (See my posts of Dec. 14, 2005 for data from that survey on price-earnings ratios; Dec. 31, 2006 regarding online settlement capabilities integrated with ADR methods; and Dec. 9, 2005 about the AAA and “ADR-favoring companies.”).

To the question, “How does the cost of arbitration compared to litigation?,” 58 percent of the respondents said arbitration was less expensive than litigation, 8 percent said it was more expensive, and 34 percent could detect no difference. With regard to “How does the speed of arbitration compared to litigation?,” 67 percent felt arbitration was faster than litigation, 7 percent perceived it to be slower, and 26 percent saw no difference.

Three questions come to mind from this data.

It sounds wonderful and straightforward if we could rank law departments on a bell curve of the number of their management initiatives. Some departments on the left tail of the array do very little to manage themselves; the large group humped in the middle have two or three activities underway to improve performance; while out on the right are a few with a slew of improvement programs underway. That may be dreamed, but it is far too simplistic and unrealistic (See my posts of July 14, 2006 on models generally; and Aug. 28, 2005 on the McKinsey 7S model.).

A bell curve misconceives the reality of law department management because not all efforts to produce more with better quality at lower cost have the same consequences. A program to recycle doesn’t hold a candle to an all-out effort to converge law firms. You can’t simply count management endeavors as if they were all equally vital and graph the number.

For another reason, there is no accepted taxonomy or terminology to describe precisely the many efforts by general counsel to increase effective output (See my posts of March 27, 2005 on the value of an inventory of your management initiatives; March 11, 2007 that compares initiatives to processes.).

When economists create a model to describe how an economy, a region, or a company functions, they typically allow for some influences that are outside their model’s scope – so-called exogenous factors. In a like manner, a general counsel can do everything within her powers to run a tight law department and plan for the future, but then – wham – in slams an exogenous factor (See my posts of Aug. 28, 2006 on crisis planning; and May 13, 2007 on decentralized locations of lawyers and business continuity.). What seem to me to be two exogenous factors in the patent world have come to my attention.

According to the ABA J., Vol. 93, May 2007 at 44, “the Patent and Trademark Office has issued at least 52 patents covering specific tax strategies. Another 84 published applications for tax strategy patents are pending.” It is rumored that legal strategy patents have been applied for in other practice areas, such as real estate and corporate law. Out of nowhere comes this new legal risk, that what the department wants to do runs afoul of someone else’s patent.

The second exogenous factor is the recent US Supreme Court decision as to what constitutes novelty for an invention to be patentable. That judicial pronouncement will perhaps dramatically reduce intellectual property work and spending; or, possibly for a period of time, there will be a surge. Either way, it’s hard to anticipate such external changes.

Various posts have referred to the in-house discovery groups and organizations that law departments have created in response to the digital tidal wave and the exigencies of e-discovery (See my posts of Feb. 1, 2006 about Altria; Aug. 26, 2006 #1 about Cendant; Feb. 14, 2007 about Halliburton and the Corporate E-Discovery Forum; Oct. 1, 2005 about Marathon; Feb. 14, 2007 and Feb. 25, 2007 about Pfizer; March 23, 2007 about Verizon; and Feb. 18, 2007 about the Corporate Forum.).

Most of us haven’t a clue how much electronic stuff is out there. One of my early morsels tried to convey high 10 gigabytes of documents stacked on top of each other would reach – twice the height of the Washington Monument (See my post of Sept.17, 2005 #5.). Pretty proud of myself, I must confess I was, to make tangible such a huge number.

Take a deep breath, since that was not such a huge number, and ogle these mind-boggling statistics from Scientific Am., Vol. 296, May 2007 at 36, and a study conducted by IDC and EMC Corp. An exabyte includes 1 BILLION gigabytes – how paltry my 10 GB example! – yet in 2006 the world created, captured, and copied 161 exabytes!

A survey and report by PriceWaterhouseCoopers concisely explains (at 6-7) what it describes as the four most important advantages of international arbitration: flexibility of procedure (66 of the 103 online participants selected it), privacy (54 selected it), choice of arbitrators (49 respondents), and enforceability of awards (48).

The report then turns to the respondent’s most significant concerns regarding international arbitration. Expense was cited by 70 out of 80 respondents – perhaps some respondents did not complete this section. The time it takes to complete an arbitration came next (42 of the 80 chose it), followed by national court intervention, the lack of an appeals structure, and no mechanism for bringing in third parties.

Four reasons are given for choosing international arbitration; four disadvantages, while the survey did not ask the respondents to net the differences. That didn’t stop the authors from writing this pro-arbitration summary: “Corporations perceive that the distinct advantages outweigh the disadvantages associated with the use of international arbitration.”

McKesson has made available online its “Comprehensive Compliance Program.” The program has seven elements, one of which is a no-cost telephone number for employees to call to report possible violations. As McKesson states it, “McKesson has established a toll-free EthicsLine, available 24-hours a day, 7 days a week, which can be used to anonymously report violations of the Company’s policies [including its Code of Conduct] or other possible illegal or unethical activity.” As for the law department’s role, “Information from EthicsLine calls is provided to the Company’s compliance attorney for review and appropriate action.”

Note the service provider who actually picks up the phone: “Calls are answered by a third-party communication specialist who is trained to handle calls and forward them to the Company appropriately and confidentially.”

As is evident, there exist niche service providers who answer confidential calls on corporate ethics lines.

In October 2006 the 21 members of Marriott Vacation Club International’s law department (MVCI), hosted 80 students from a Florida high school for a day of workshops. The event was part of a MVCI program and partnership with Street Law, Inc. and the Association of Corporate Counsel’s (ACC) Corporate Legal Diversity Program which is aimed at encouraging students of diverse backgrounds to consider careers in the legal profession.

According to the MVCI release, students took part in interactive workshops on contract negotiations, torts, and deceptive sales practices. In each workshop, students could role-play attorneys, judges, or salespeople and to apply legal principles to solve disputes or analyze a situation. Earlier in the school year 12 MVCI attorneys spent five days teaching about these topics in elective legal classes at Oak Ridge High School.

A commendable community service effort, and one that many law departments could emulate (See my post of Feb. 11, 2007 on pro bono compared to community service projects.).

I felt I drove beyond my headlights when I included in my list of RFP criteria a law firm’s position on environmental protection (See my post of Feb. 6, 2007.). But the high beams went up when I read about Morrison & Foerster’s IT recycling programs. Anthony Hoke, the thousand-lawyer firm’s global technology purchasing/asset manager, provides in Law Tech. News, April 2007 at 39, some startling statistics about his firm’s conservation achievements.

Over the past four years, the firm has replaced all cathode-ray tube monitors with liquid crystal display (LCD) monitors. That substitution, among its many benefits, has saved roughly 619 megawatts of power each year. The law firm has consolidated its physical servers and has thereby saved an additional 830 megawatts a year. Those two programs save enough energy to power 136 US homes for a year!

A third achievement, through Redemtech, has been to recycle nearly 80,000 pounds of obsolete CPUs, monitors, keyboards and other hardware. They went to non-profit organizations (6%), were resold (65%), or were completely recycled (29%). As a fourth initiative, the firm remanufactures its printer toner cartridges. Last year, using Advantage Enterprises, the MoFo re-claimed 7.2 tons of empty toner cartridges from its US offices. This year the firm plans to standardize and enforce power conservation settings for printers, desktops, and notebooks.

Hard as it may be to identify in a consistent and collectively-agreed upon way the meaning of “management initiatives” (See my post of March 11, 2007 on management initiatives compared to processes.) there is at least some hope that within any particular initiative set, one can describe the variations on a four-part scale: none, some, a fair amount, and progressive. Let’s take knowledge-management to see how the scale might play out.

A department that does nothing in any formal organized way to collect and disseminate knowledge could be described as a “one.” A department might be described as a “two” that has tried a few aspects of knowledge management, such as to install a document management system and push people to use it. Moving up from such a basic level, an intermediate law department warrants a “three,” perhaps because it has studied knowledge management, put in place several programs such as to collect work product from outside counsel and generally values the collection and distribution of legal knowledge.

A sophisticated law department that has invested significantly in an intranet site, appointed a lawyer in charge of knowledge management, enlisted law firms, and taken other progressive steps would earn the highest number on the initiative scale: a “four.”

To supplement some earlier posts that discuss aspects of expert witnesses (See my posts of May 17, 2006 about the industry; Oct. 19, 2005 regarding patent experts; and March 20, 2007 on the cottage industry generally), I have listed some online sites that may be useful. These references came from the website of the Internet Legal Research Group, and I have not checked all of them for currency or accuracy.

American Forensic Medical Specialists

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