Articles Posted in Tools

Most of what takes place in a law department would not be handled any better if the activities were codified. A small number of repetitive processes, however, such as how to handle subpoenas or to take care of options that are exercised by senior executives, might be done better – and certainly become easier to train – if the law department studies the processes and creates guidelines.

Guidelines are heuristics that help people who are part of a process, but the codification need not be as formalized as a policy statement. Law departments accumulate many guidelines: how to complete expense reports, what steps to take to order subscriptions, what to do if the department wants to add another law firm to its provider list; checks on the accuracy of Board books, and on and on.

As described in Counsel to Counsel Connections, Vol. 3, Summer 2003 at 12, Genentech, the biopharmaceutical firm, had at the time a web-based compliance program that offered or complemented six functions.

The program displayed the company’s Code of Ethics and also Good Operating Principles. It had “policies, procedures and controls for every commercial unit that are updated on a regular basis. Its third offering was interactive training programs, for which “All personnel must participate, be tested, and receive minimum scores” to remain employed. The system had an audit facility to track reports required and issued by commercial units. It also listed the disciplinary guidelines for actionable offenses and it fit with a hotline for employees to seek information and report issues (See my posts of Dec. 19, 2005 on BP’s similar resource; and July 5, 2006 on the genre of software as a cottage industry.).

Early in the last decade of the twentieth century, total quality management (TQM) washed like a tsunami over U.S. companies. Drenched also, law departments started quality circles, read Deming, prepared fishbone analyses, struggled to apply defect and variance control, prepared histograms, and otherwise drank the TQM Kool-Aid.

Today, many of the sound practices of TQM have been absorbed, silently and without attribution, and are little noted. Six Sigma, as many have pointed out, can trace its ancestry to the TQM movement (See my posts of March 9, 2006 and March 15, 21006 on Six Sigma projects at NCR and International Truck.).

Several algorithms and methods of document search, useful in litigation support, have been patented (See my post of Feb. 23, 2006 about four of them.) and certainly nearly all of the software and legal publications used routinely by law departments are under patent or copyright protection.

But a troubling question strikes me, one which goes to the core of innovation in law departments. How many procedures of law department managers patentable? After all, there are a dozen or more patents pending for tax avoidance strategies.

A few law department patents have surfaced. American Express’ legal department filed a patent for a process it invented (See my post of Jan. 25, 2006 about its patent application regarding law firm rate increases.). FMC Technologies has patented a system for outside counsel management, called ACES. Perhaps the litigation document system Cisco developed has some patentable elements (See my post of Sept. 21, 2005 about the software.).

Beta has been a traditional measure of risk, which companies use to estimate the cost of capital. A beta greater than one means that the company’s share price is likely to move in the same direction as the market but by a greater amount. The share price is more volatile than the market average. The larger a company’s beta, it is argued, the greater the returns to investors and hence the greater the cost of capital, according to the McKinsey Quarterly, 2006 No. 3 at 12 .

We might calculate something similar to a beta for law departments. If we had a large enough database, say 500 or more law departments, and metrics about their caseload and litigation spending, We might be able to show that a particular law department has more or less volatility than its peers in terms of managing the financial risks of lawsuits.

I thought that extranets maintained by law firms have been much sound but little fury (See my posts of Aug. 27, 2005; Oct. 21, 2005; and Feb. 12, 2006 – all dubious about the value and popularity of extranets.). Then I read about Foley & Lardner in Law Firm Inc., Sept./Oct. 2006 at 53.

Foley “has more than 400 active extranets.” The article adds no details, but the sheer number of them at this AmLaw 200 firm — far from the largest, suggests that I may have under-estimated the proliferation of extranets.

The article adds a fillip: “The IT department [of Foley & Lardner] also has a client consultant on staff who can make clients aware of the firm’s technology and assist them in using it.” That is an excellent resource and probably one reason why the Milwaukee-based firm has hundreds of extranets running.

Every activity in a law department is part of a process, although processes vary hugely in their granularity (See my posts of April 27, 2006 which defines processes; May 1, 2006 about the breadth of the term; June 28, 2006 on their importance; and Aug. 13, 2006 on components of processes.). At the macro end, virtually everything a department does could be considered one process: helping the company avoid legal problems. At the micro end there can be processes for putting RFID tags on file folders or shredding all drafts of environmental remediation plans (See my post of Oct. 18, 2006 on shredders.).

The term “tools” covers all the instrumentalities that help those in a law department accomplish processes. A tool is a personnel evaluation form, a budget, a database of leases, an OCR scanner, a statistical breakdown, or a group e-mail distribution list.

What makes the term “processes” elusive is that each process can be subdivided into smaller processes; likewise most processes can be aggregated into a larger, broader-scale process. In a similar way, tools can often be broken down into sub-tools. For example, technology is a high-level tool, which encompasses the department’s matter management system, which has the component tool of e-billing, based on the LEDES98b standard tool.

The torrents of documents that pass through a law department include some of the company’s most sensitive. Those proprietary and confidential documents – executive severance agreements, plans for reductions in force, settlement negotiations, and internal investigations – are vulnerable to improper disclosure – unless the department uses a shredder.

Shredders are inexpensive and easy to use, so the hard part about shredding is setting out a policy for when should documents be shredded and who should do the shredding. Mind, one complementary security measure for documents that need to be kept secret is to put printer/faxes in more offices.

A recent survey on diversity in law departments, InsideCounsel, Oct. 2006 at 56 et seq., states that “377 in-house attorneys responded to this survey. 19 percent of them were general counsel. 70 percent of respondents identified themselves as white; 14 percent as black; 7 percent as Hispanic; and 7 percent as Asian.” From these statements, ponder four points about surveys.

For a survey to have added credibility, it is important to disclose how many people were invited to complete the survey, and how that population was decided. For example, interpretation of the results differs if all readers of InsideCounsel were sent a survey or if only members of affiliation organizations, such as the Minority Corporate Counsel Association, were urge to complete an online survey.

Second, the article refers repeatedly to the percentage of companies or law departments who responded a certain way, yet the respondents were individuals. Do we know that only one person from any one law department responded?

The Fin. Times, Aug. 22, 2006 at 5 ,cites an unusual offering of the UK law firm Addleshaw Goddard. The firm has an organizational consulting unit “that has helped clients such as BT Group, Aviva and J. Sainsbury structure their legal functions.” It would be boorish to wonder about the visually impaired guiding the visually impaired.

Even so, perhaps because I support this blog habit by occasionally consulting to law departments, I find it hard to imagine how a law firm can do an equally good and unbiased job of consulting to a law department on the department’s functions and structure.