Articles Posted in Tools

During my consulting career I have known only one calculation of “weighted average” (See my posts of Nov. 30, 2005 with my definition and an example; and Feb. 20, 2006 with an example from litigation.). I presumed you add up all of one figure from a set of law departments (such as numbers of lawyers in each department) and divide by all of another figure (such as company revenue). Ah, Rees, never presume, as it makes a presumptuous you-know-what of you and me.

It turns out there is a different formula to calculate weighted average and it does not reach the same result. Here is an example. To weight the ratio of lawyers per billion dollars of company revenue by revenue, multiply each company’s ratio by its revenue and add all those products. Then divide that total figure by the total of all the companies’ revenue. Excel has a built-in formula to help with the math.

Cybersettle, Inc. offers an online dispute resolution service whereby parties to a lawsuit (or dispute) can use the software as a neutral tool to help them reach agreement. Here is another technology for law departments as well as another cottage industry serving law departments (See my post of July 21, 2006 about the cottage industry and references cited.)

A short item in Met. Corp. Counsel, Nov. 2006, at 68 announces Cybersettle’s strategic alliance with the American Arbitration Association (See my posts of Dec. 9, 2006 on ADR-favoring companies; July 20, 2005 on employee disputes and ADR; and Nov. 17, 2006 on mandatory arbitration.). According to the item AAA offers not only traditional conciliation, mediation and arbitration facilities but also “online case management tools.” Cybersettle and AAA will link their online services.

McKinsey research, published in the McKinsey Quarterly, 2006, No. 3 at 65, reaches three main conclusions. The first is that “executives should eschew simplistic organizational solutions: when applied in isolation by the companies in our database, popular techniques such as management incentives and key performance indicators (KPIs) were strikingly ineffective.” For law departments, that means it is unproductive to graft on a single, new buzz-trend.

Second, the McKinsey research found that “high-performing companies must have a basic proficiency in all of the available practices; a conspicuous weakness in any of them drags down the overall result.” Translated to law department management this suggests that being good in the building blocks of management — all of them — counts for more than excelling in a few areas but lagging in the rest.

The most important finding of the study is that managers should “concentrate most of their energy and a small number of practices that, introduced together, typically produces the best results.” The key ones are accountability (“clear roles within a structure matched to the needs of the business”), clear direction (“a compelling vision of the future”), and a strong culture (one that “encourages openness, trust, and challenge”). Law departments could adopt this trio wholesale and focus on individual responsibilities, a shared objective and set of values, and a team-oriented style.

The most commonly-used reports of data captured by matter management software are those that come with the software, the so-called “canned reports.” Robust packages have 15 to 20 such pre-formated reports. Many law departments supplement those standard reports with a second capability, that of a third-party report writer such as Business Objects or Crystal Reports. Given a standard database structure, a matter management system can recruit a report writer to prepare reports.

Third, some sophisticated matter management systems have report-writing wizards which allow the user to go beyond the canned reports yet not have to master the more powerful and harder to use report writers.

Yet a fourth variation is for the user to generate one or more canned reports and export the results to a spreadsheet. The spreadsheet software lets the user manipulate and format the data to create a custom report. Finally, I have encountered in my consulting practice some instances where law departments that share the same matter management vendor swap reports that the law departments have individually prepared. Since there is nothing proprietary about a report format, if one department has fashioned a useful format, it might as well share or trade.

Every practice of a law department falls somewhere on a spectrum of related activities (See my post of Nov. 26, 2006 that explains this continuum notion.). It is also evident that each practice has its proponents and its opponents. Because of disagreements over values, the complexity of the social system within and around a law department, and unintended consequences, every management decision made in a law department has not only tradeoffs but also pros and cons.

Take centralized reporting. For one of my consulting clients I identified more than 20 factors that influence the desirability or undesirability of having all practicing lawyers report to the general counsel. Additional factors have influence one way or the other depending on context. For examples of management choices that arouse debate, see my posts of Nov. 14, 2005 (forced ranking of employees); Dec. 16, 2005 (partnering); and Dec. 11, 2006 (discounts on billing rates); June 30, 2006 (tracking and charging internal lawyer time.).

Just a toting up arguments for and against a practice isn’t nearly thoughtful enough. A person ought to weight the relative persuasiveness of each argument in the context of the company, the law department’s personnel, and their needs.

Economists believe there are causal links between the institutions of a country and its prosperity. Institutions – organizations, formal laws and unwritten rules that govern a country – function better in rich countries than in impoverished ones. But it might be that wealth breeds stronger institutions, a reverse causality. To explore the relationship, economists seek third factors that are linked to stronger institutions but are unconnected to economic success, according to the Economist, Nov. 4, 2006 at 88. One example is winds and weather, which explains when many islands were colonized, and the length of colonization correlates now with prosperity. Meteorology was an instrumental variable.

Or do campaign contributions influence a political candidate’s vote share? The problem is that both variables may be influenced by perceptions about the threat posed by a challenger. That factor is an instrumental variable.

What’s an example of an instrumental variable in a law department? Many managers believe that quality lawyers lead to high productivity. They also probably believe that a productive law department lures and keeps quality lawyers. So, which comes first? In which direction does causality flow? An instrumental variable might be the company’s reputation. A company well thought of may entice superior lawyers to join and also boost productivity.

Once a white hot growth area, back in the early 1990’s, bill auditing cooled off considerably, and some auditors shifted out of that line of work. Even so, quite a few remain, and they are veterans. Those named below have been or are involved in the bill review sub-industry.

Accountability Services (Judith Bronsther);

Computer Sciences Corporation;

By spectrum I mean a range of approaches from one extreme to another along a continuum. One such spectrum is how a legal department processes law firm invoices. Extant today is a range that shifts gradually from no review at all because invoices go straight from firms to accounts payable, to some review of bills on major matters, on across to multiple levels of review and recording of all bills – including electronic billing rules and elaborate guidelines together with electronic transmission to accounts payable and sophisticated reporting.

That’s not all. A spectrum exists the next level down. Every lawyer who reviews invoices has an individual style. More, any lawyer may change the style according to the time of day, personal foibles, the law firm involved, the press of work and myriad other factors. Each individual involved in a spectrum process – processing invoices being only one of many – acts on a spectrum.

Now consider the level above. If invoice review is viewed as one element of a broader process – outside counsel management or cost control – then it is one element that is changeable across a set of activities that are themselves on a spectrum.

A “meme” has been defined as “an information pattern, held in an individual’s memory or in an outside artifact (e.g., book, record or tool), which is likely to be communicated or copied to another individual’s memory.”

Examples of memes that pertain to law departments are ideas (partnering), technologies (docketing software), theories (handle commodity work inside, specialist work outside), practices (charging back outside counsel fees to business units), fashions (third-party bill auditors), techniques (RFIs), and traditions (hire only experienced associates or partners). Memes cover all forms of knowledge, beliefs, values and behaviors that are normally learned from others rather than discovered independently (See my post of Sept. 10, 2005 about sources of innovations (memes) in law departments.).

Memetics, the science of memes, studies the replication, spread and evolution of memes. For readers of this blog, the core idea of memetics is that memes differ in their degree of “fitness”, i.e., adaptation to the law department in which they propagate (See my posts of July 14, 2005 and Sept. 13, 2005 on best practices.). Because of natural selection, fitter memes will be more successful in being communicated, spreading to a larger number of law departments and surviving for a longer time. Memetics tries to understand what characterizes fit memes, and how they affect all levels of society.

No general counsel is an island. Each general counsel is connected to and relies on heads of other support groups, and those peer groups have a say in many law department initiatives. If you want to choose a document management system, you must come to terms with Information Systems and its protections, prices and policies. If you want to change how you evaluate lawyers, Human Resources will have a view on content, consistency, scales, levels and timing. If you need different data captured about legal spend, Finance may or may not be able to comply. Internal Audit may have something to say about your hoped-for e-billing system. Despite your protests, you may find that Facilities imposes or prohibits cubicles for paralegals.

Even if one of these so-called support groups functions does not block your progress, they can certainly slow it down.

Of course, you wouldn’t want to hear what they say about the law department!