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This post scrapes the bottom of pessimism. Still, the mismatch that must happen between relatively uninformed lawyers and the savvy partners they presume to direct deserves comment. So did the Emperor’s clothes.

We make three assumptions about inside lawyers who have retained outside counsel to give advice in an area unfamiliar to the inside lawyer. At the most basic level we assume the lawyer can direct and assess the value of the service provided by the firm. If you are a novice, how can you? The blind lead the sighted (See my post of May 1, 2006: inexperienced inside lawyers can’t assess value of outside counsel.).

As for the next challenge, we assume that the inside lawyer, often a generalist in a small department swamped with demands, can make sound decisions on legal strategy. If you have never been down the tangled path, how can you foresee the full walk? The blind try to be farsighted.

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On the website of eHow.com you can read a thumbnail description of several corporate staff functions, including legal. Very peculiar in several respects, it is pasted below. The bracketed numbers I inserted follow the odd words or phrases I comment on after the quote.

‘The legal department receives legal reports [1] from lawyers who work with other departments in the company or processes [2] legal documents such as contracts and licenses [3]. The chief legal officer or general counsel position usually leads executive level [4] legal departments. These departments may provide litigation, legal compliance and risk management, business ethics and government relations functions.’ [5]

[1] Reports? This statement mystifies me because report reception amounts to nothing in law departments, and even more because the presumed report writers are “lawyers who work with other departments.’

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The legal department of the Financial Times recently introduced a practice that, taken at face value, I would question: “the introduction of questionnaires for internal clients to fill out upon completion of a job.” (Corp. Counsel, April 2011 at 26)

I question that effort because it imposes too much on clients – lots of matters, time and paperwork. It also calls for decisions of when a matter (job) has fully finished. Some matters have several clients who take part, such as a marketing campaign, not to mention questionnaires are inherently rigid.

A periodic random sampling done verbally, with a guideline of questions to ask, serves far better to assay client satisfaction.

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Lisa Hart, the CEO of Acritas, shared research on what law departments find effective when law firms solicit business from them. These five attributes of pitches come from her presentation at the Georgetown University Law Center’s Center for the Study of the Legal Profession conference three weeks ago. Acritas surveyed hundreds of in-house counsel and ask them to rank these characteristics. Many departments could use this as a checklist and evaluation tool.

Understood our business (14% chose it as most important)

Understood our needs (12%)

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It is an honor to be invited to speak on a panel at InsideCounsel’s SuperConference. The panel’s topic, at 2:00-3:15 PM on May 23rd, will be metrics for managing law departments. I will be focused on benchmark metrics and client satisfaction measures. My co-panelists will be the General Counsel of Medtronics, Cam Findlay, and Karen Dunning, who handles metrics and analysis for Motorola’s law department.

Any readers who attend, please come by and say hello! I might even be able to send my slides to those who care to see them.

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An executive from Micro Strategies, Inc., in Met. Corp. Counsel, March 2011 at 33, points out some of the proliferating cloud choices: “software as a service [SaaS], infrastructure as a service, platform as a service, and desktop as a service.”

SaaS includes such online hosted software as Serengeti Tracker and GoogleDocs. Infrastructure as a service includes huge server banks that law departments can use for storing e-discovery documents or backups of any kinds of files. I think deal rooms are examples of a platform as a service since they offer a suite of capabilities, and desktop as a service may pertain to iPads and other tablet functions that use Internet-based resources.

Given the ability of a law department to mix and match from this set, “This provides a minimum of 16 different kinds of cloud offerings.” Law department managers and their technology advisors need to stay abreast of this plethora of new alternatives.

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An excellent chart in a recent benchmark report by Otto Henning & Co. based on large German companies provides insights into their law departments and level of use of nine technologies. Based on implemented systems only (Im Einsatz), all of them have access to a corporate intranet (Unternehmens-Intranet). Online research (Nachschlagewerke, including z.B. JURIS, Beck Online) is available for 89 percent of them. Document management software has been implemented by 65 percent of the 56 law departments followed by “Workflow-Systeme” in 51 percent. That latter category intrigues me, even more because of how common it is.

In decreasing order after those four technologies are e-learning systems, project or matter management (Wissenmanagement-systeme), transcription equipment and software, time tracking (20%) and matter management systems (Externe Kanzlei-Rechtnungsprüfung z.B Legalbil, DataCert). The age of integrated e-billing and matter management has not yet dawned in Germany.

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The top lawyer of Anheuser-Busch InBev, Sabine Chalmers, describes her 150-lawyer department in Practical Law, March 2011 at 80. In accordance with her dual title of Chief Legal & Corporate Affairs Officer of the $36.8 billion company, she and her team also have responsibility for “corporate affairs.”

The profile briefly describes corporate affairs as “communications, public affairs and corporate social responsibility.” That scope extends to the horizon and doesn’t fit at all with what corporate lawyers traditionally do.

On the other hand, that lawyers aren’t skilled at a task doesn’t’ at all mean that the general counsel can’t oversee the function effectively. Chalmers undoubtedly has skilled people in charge of corporate affairs and quite possibly none of them have law degrees. After all, in some companies general counsel manage corporate jets, security guards, human resources and internal audit to name but a few unrelated functions.

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“The board of directors decides the outlines of the staff, and structural organization of the legal and compliance function. Among other things, it decides whether the functions are joined or separate, whether they are handled centrally or not, to whom these functions report (board of directors, audit committee, CEO, etc.) and what resources and tools will be allocated to these functions so they can do their work effectively and reliably.” This quote comes from an article in the ACC’s Docket, Jan./Feb. 2011 at 42, written by a Swiss lawyer. He goes on to say that the board can delegate these legal and compliance tasks to corporate management who in turn can delegate responsibility further down.

As written, up to the delegation statement, the quote suggests far more intervention than I expect holds for boards of directors. Certainly the board bears ultimate responsibility for the actions of the company, both legal and compliance, but the quote pictures a degree of hands-on decision-making that doesn’t apply. The CEO or the general counsel, in the main, decide the functional characteristic outlined.

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Total cost of ownership (TCO) should be a calculation done by all law departments before they select software. An executive of Datacert wrote that the definition of TCO “includes all the upfront costs of procurement, including hardware and software, as well as ongoing operational expenditures such as training, administration, maintenance and system scaling to support growth.” Another person in the same article in Met. Corp. Counsel, March 2011 at 33,.added space, energy and HVAC. You want to have a handle on the all-in costs of the finalists before you choose.

It appears I have never referred to the term TCO directly but I have addressed the idea and some of its components (See my post of Aug. 14, 2005: costs of training when software is installed; Sept. 10, 2005: costs of litigation support software; Dec. 31, 2008: 10 questions to ask about software offerings; April 8, 2009: costs of team to choose software needs to be figured in; Oct. 28, 2009: open source software may actually be open wallet; and Feb. 8, 2010: high software maintenance charges.).