Articles Posted in Tools

The one-time European General Counsel for Eastman Kodak, Helen Fletcher Rogers, left that position around 2004 and became a consultant with UK-based Lawyers in Business, “an organisation dedicated to ensuring in-house lawyers are able to make a real contribution to their businesses.”

Lawyers in Business were described on the web site of Totallylegal as running “a series of workshops from lunchtime networking seminars to morning and afternoon classes.” (See my post of July 31, 2005 on former general counsel who tried or became consultants to law departments.).

CAGR is an imaginary number that describes the rate at which an investment or expenditure, such as outside counsel payments, would have grown if it grew during a period of time at a steady rate. Thus, if a legal department paid of $10 million to outside counsel in 2005 and five years later paid $20 million, then its spending grew 100 percent. True, but what was the smoothed-out rate of increase each year?

Here’s the answer, courtesy of the general formula for calculating CAGR:

CAGR = (ending amount / beginning amount) (1 / # of years) – 1

Sometimes law departments turn to a law firm not so much for legal advice as for consulting advice. I know of companies where law firms have reviewed and recommended on a law department’s litigation process, on how another one should handle documents in discovery, on processes for dating stock options, and on portal technology.

I am biased, to be sure, but I suspect the consulting projects run by law firms are expensive, target findings and next steps that have substantive legal implications (business development, that is), and misses many of the tools of experienced consultants.

Even so, law firm partners qua consultant is one more resource available to law department managers (See my post of April 5, 2005 on the Association of Consultants to Law Departments.).

An index is a way to show percentage changes in different series of numbers against the same starting point. Typically, a scale’s starting point is 100 and it tracks the divergence from that number over time of the series under consideration. For example, starting with data from five years ago a law department might show the increase in number of patents filed per year by competitors, the change in appellate court decisions involving major patents, the total headcount in the department’s patent group, and fees paid to external law firms, foreign agents and government patent agencies – all as a percentage change from the 100 starting point (See my post of Aug. 14, 2005 about a trademark index.).

This kind of index gets away from absolute numbers and conveys percentage changes visually. It normalizes disparate data in terms of the same starting point and their subsequent percentage changes.

A different use of “index” means a composite of data elements, where usually some of the elements are weighted by their relative importance: the Consumer Price Index is a classic (See my posts on composite indices of Aug. 28, 2005 about client satisfaction; Sept. 10, 2005 about overall law department performance; and Aug. 27, 2005 about a complexity index; of Aug. 20, 2006 about an index of law firm performance.).

Post mortems, aka after-action reviews, make sense under the right circumstances, such as after major litigation (See my posts of Dec. 10, 2005 about litigation studies at BellSouth; April 2, 2005; April 27, 2005 on knowledge management; and April 7, 2006 on litigation.). The value to a law department of retrospective analysis of a process or transaction goes far beyond litigation.

According to article in MIT Sloan Mgt. Rev., Summer 2006 at 31 by Salvatore Parise, Rob Cross and Thomas H. Davenport, it is one technique that can help to mitigate the loss of an experienced lawyer. “The typical approach is to capture and store what a departing person knows by codifying electronic files and reports, conducting subject-matter interviews and capturing lessons learned or best practices from projects in which the employee played a lead role.”

The authors write that an “after-action review — detailed, illustrative and analytical conversations that can help call attention to and codify tacit knowledge of what went right (and wrong) on a project” (at 34) help immensely. Done thoroughly, a post mortem takes time and fought, usually from people at a level where time is highly valued. But the payoff from the knowledge that can come from a post mortem, such as tacit learning, guidelines, checklists and process improvements, supports doing more of them.

Standard deviation is the most common statistic to describe how spread out are the values in a data set. (OK, if you insist: standard deviation is the square root of the data’s variance.)

Standard deviations allow a person to compare the degree of dispersion among two sets of unrelated members. For example, how do you compare the distribution of a law department’s invoices to the size of its law firms in the same terms? Assuming a normal distribution of invoices, 68.2% of them will lie within one standard deviation on either side of the average invoice amount. One more standard deviation on either side accounts for 27.2 percent more of the invoices; thus, 95.4 percent of all the invoices will be between two standard deviations on either side of the average amount.

If the law department also graphs the number of lawyers in each of the firms that represented it over several years, assuming a statistically normal distribution, the department could describe their sizes in terms of standard deviations.

It seems plausible that those who lead law departments can pick up management ideas from those who lead tax departments. So when 98 major US-company’s senior tax executives offered views about their departments to KPMG in 2005, the five-page summary report held promise.

My hopes were disappointed, as it turned out, because the two professional groups have significantly different concerns. Still, despite the differences between the departments, four points stood out: process improvements, use of outside assistance, corporate technology support, and internal audits.

A majority of the tax departments planned to undertake process improvements in the following 12 months (at 2). Law departments would probably forecast a similar percentage, especially as the term “process improvement” was undefined. Second, the majority of the tax departments outsource some functions, whereas law departments all outsource some of their legal work. As a third commonality, nearly two thirds of the tax departments requested assistance from the company’s IT function in the previous 12 months. My sense is that a smaller percentage of law departments draw on IT for any substantial support in a given year. Finally, “a slight majority of respondents reported that their tax functions were subject to an internal audit in 2004, and that they had similar expectations for 2005.” It is an exceptional year, I believe, during which a law department undergoes an internal audit.

The term “brainstorming” does not mean a group of people conjuring up ideas about something. Rather, according to the New York Times, October 28, 2006 at C5, brainstorming in its true form is a rigidly structured process (See my post of Nov. 28, 2005 on mind-mapping software and brainstorming). That process demands three vital elements.

First, the group needs a facilitator trained in drawing out the best ideas. “Groups using a facilitator come up with 600 percent more ideas that those that don’t,” according to Scott Isaksen, founder of the Creative Problem Solving Group.

Second, brainstormers need clear guidelines. “For example, the session will last no more than 45 minutes and criticism or judgment of the ideas that emerge should wait until the session is over.”

This figure from the New York-based Society of Corporate Secretaries and Governance Professionals is cited by the Wall St. J., Oct. 23, 2006 at R11. The 20 percent figure feels quite high, given how recently software for board members has arrived (See my posts of July 19, 2006; and Aug. 9, 2006).

The article summarizes the standard features included in these packages. Those features typically can cost from $3,300 per year for a basic portal from InfoStreet (Tarzana, CA) to more than $100,000 per year for a sophisticated, multi-company portal from BoardVantage (Menlo Park, CA).

Law firms, too, can use board portals for their clients. The article references Reed Smith, which uses a portal from New York-based Diligent Board Member Services LLC. The article mentions other portal packages for boards of directors, such as BoardLink (Thomson Financial) and Leaders 4 (80-20 Software Pty. Ltd. of Melbourne, Australia).

Readers may recall an earlier post that speculates how a law department could assess its litigation portfolio with an index based on a number of metrics (See my post of May 17, 2006 about indexing a law department’s litigation.). One of the ideas mentioned there was to factor in the quality of the judge presiding over each case. Now comes North Law Publishers Inc. and its website where visitors can rate federal district and magistrate judges.

The site, as described in Legal Tech. News, Oct. 2006, at 21, lets users rate judges on such factors as their ability to handle complex litigation, evenhandedness in civil litigation, scholarship, flexibility in scheduling, punctuality, and involvement in settlement discussions. A judge’s ratings on factors important to a law department could be one of the metrics in a litigation index.