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Surveys find that richer people report higher satisfaction with life than poorer people. Data on this oft-found result comes from Eduardo Porter, The Price of Everything: Solving the mystery of why we pay what we do (Portfolio/Penguin 2011) at 62, 69. Analogously, it seems likely that higher-ranking managers give better scores to law departments because they receive more attention and service than lower-ranking managers. RHIP, even if those with the privileges of office are more knowledgeable and could be tougher graders.

Not surprisingly, law departments want senior executives to comment on the performance of the law department since they have the most say in budgets and headcount and scope of responsibility. All true, but a top-heavy response sample may bias scores toward the higher end as compared to a survey that equally plumbs satisfaction levels at lower levels of clients.

Worse still could be the introduction of a statistical device. I have previously suggested that law departments weight satisfaction scores to give more importance to respondents in the higher ranks of the company (See my post of May 31, 2005: client satisfaction scores and manager rank.). If those same executives, however, received better than average services from the department in the first place, a second step that weights their scores would further skew the results (See my post of March 25, 2005: weights given to evaluations.).

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A survey of French law departments during the fall of 2010 asked whether they had put in place a panel of law firms and negotiated fee arrangement with those firms. From responses of 91 general counsel, two thirds of them had done so (69%). Convergence and discounts have become a common tactic around the world. Convergence is not a continuous process. From the following question, it is clear that few of the French law departments (17%) plan to reduce further the number of law firms with which they work.

The benchmark survey cited above was conducted by Helene Trink of Profit & Law together with Equiteam, an executive recruitment firm. They invited 475 general counsel (Directeurs juridiques d’enterprises) of which 100 responded. The cited data comes from page 10 of the report.

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If one thing costs more than another, similar thing, that fact alone “turns on the neurons in the medial orbitofrontal cortex, an area of the brain associated with pleasure feelings.” Eduardo Porter, The Price of Everything: Solving the mystery of why we pay what we do (Portfolio/Penguin 2011) at 20, 253. Wine, for example, tastes about the same to average drinkers who are not told costs – they like the more expensive wines, when told, even if “prices” are assigned randomly!

The same attraction may hold with expensive law firms or lawyers (See my post of Feb. 17, 2008: research on wine extrapolated to costly firms; and Oct. 19, 2008: neuroscience predicts we will favor expensive firms.). Moreover, well-known firms, those with prestige cachet, also may excite that pleasure area of the brain. The conjunction of prestige and pleasure does not necessarily mean in-house counsel retain firms irrationally, since prestige often correlates to quality. But it does mean that a purely rational calculation of which firm to hire may be hijacked by primitive neural biases.

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Georgetown University Law Center’s Center for the Study of the Legal Profession coordinated yet another highly successful conference last week. Among the wide-ranging presentations about trends in the delivery of corporate legal services that Professor Mitt Regan and his colleagues hosted, one featured Lisa Hart, the CEO of Acritas, who shared research data on why law departments retain specific law firms.

The leading reason, chosen by 77% of hundreds of general counsel surveyed, was “Expertise.” Not just brains, Hart stressed, but substantive legal depth. Next came “Service” at 44%, “Relationship” at 29%, “International” in the sense of offices around the world where it mattered at 15%, with “Business Savvy” and “Price” at 14% and 13% respectively at the end.

None of the findings shock and awe us but some points stand out. If the partner doesn’t know her stuff, all the icing doesn’t matter, by almost two to one. Delivery of good work product on time, on the mark and on the budget – Service – makes complete sense as grounds for feeling good about a firm. I am surprised at “International’s” high ranking, and it was the only one to rise over the past several years Hart mentioned, but the score may be due to Acritas’ selection of chief legal officers to survey more than the overall importance to law departments of global coverage. Knowledge of the business seems a bit low, but often external counsel are hired for what they know of the law, not the client. And, as usual, quality of legal service far outweighs economy of cost.

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My overall point from a blog posts during the past few weeks about benchmark data from Germany has been the striking similarities between most of them and their US counterparts. Another example is inside and outside spending per lawyer and the ratio between them.

The General Counsel Benchmarking Report for 2009 of Otto Henning & Co. at 107, states that the internal legal spend per lawyer of its German respondents averaged €304,192 for internal costs and €339,832 for external spend. Those 2008 spend figures convert at 1.5 US dollars per Euro to $456,288 and $504,748, respectively. The total, if we add the averages, of nearly $1 million in legal spending per lawyer comes very close to figures derived from large US companies.

Of similar closeness, the ratio Henning found in German law departments of 47 percent inside spend to 53 percent external comes very close to the typical 40/60 figure for US law departments.

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“We trust our legal department to be risk-averse and process-oriented, and as a result, they’re not very provocative and they’re not controversial.” With those disparaging words from KM World, March 2011 at S3, an executive of a content management vendor roundly dismissed at least his legal department.

Process-oriented. The image held by the executive may be more common than I want to believe. Non-lawyers may envisage a cookie factory where business terms go in and by some recipe and cutter contracts come out. Someone sues and a process grinds through discovery, papers filed in court, and in due course settlement. You need a patent; we assembly-line a patent. Behind the lawyer’s door, many might believe, it’s all so step-by-step, filling in the paperwork the courts and agencies require – while any variance from the well-trod path of process means you pick up the phone and pay a lawyer from a firm. Process-plodding.

Ironically, this blog and other observers urge process improvement in law departments, or its cousin, project management. The more we standardize and track and process map, the more efficient we will be. But to the extent we do so we may feed misimpressions senior clients hold about how rote is the work done by law departments. Call me an elitist or apologist, but the important work of in-house attorneys has a solid proportion of difficulty, unpredictability, variety and craft. Often far from process-oriented.

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It is often said in blog posts, articles and conferences that general counsel of US companies are managerially advanced compared to general counsel of the rest of the world. “Them’s fightin’ words,” you could say! How someone could demonstrate such superiority stumps me.

If there were a dozen fundamental management outcomes or practices for law departments, and if you could persuade a representative group of general counsel in several countries to fill in objectively where their department stands on the scale, you might be able to muster such a claim. Not without difficulty, because optimal practices remain unproved. More likely, the claim arises from nationalistic fervor and another manifestation of American exceptionalism.

At the corporate level, I would not want to argue that American companies, by and large, display better management than do competitors elsewhere in the developed world. Again, to referee such a broad and contentious claim could keep legions of business school professors feuding and fighting for years.

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Caterpillar has 18 lawyers in its litigation department. The department’s head lawyer, deputy general counsel Lance High, also has on his team 13 engineers “dedicated to helping with cases that challenge the design and manufacture of Caterpillar’s products.” The passage comes from Corp. Counsel, March 2011 at 68, and surely describes a most unusual and large addition of specialized staff. I suppose those engineers testify as experts or advise retained experts. They might pitch in during patent litigation and they could teach lawyers about the massive equipment Caterpillar manufactures Perhaps they assist with discovery and trial graphics. Whatever their roles, the baker’s dozen of engineers deploy huge talent as they team with Caterpillar’s lawyers.

Throughout this blog there are references to specialists in law departments who are not paralegals or administrators, including e-discovery experts and project analysts (See my post of Sept. 10, 2005: the range of non-lawyer specialist roles; March 13, 2006: non-lawyer specialists; April 30, 2006 #5: procurement manager at Microsoft; June 4, 2007: Cisco’s knowledge management directors; May 27, 2008: risk of loss of non-lawyer specialists in law departments; and Feb. 9, 2010: Clorox’s project managers.).

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The lead article in Corp. Counsel, March 2011 at 67, profiles seven experienced administrators (aka business managers, managing directors, directors of administration, etc.). The piece on Danette Gallatin of The Williams Companies had a couple of sentences not so much about that role but about dispersion of law departments when its company undergoes corporate meiosis.

”Though its law department is on the smallish side, with 39 attorneys, there were 100 when Gallatin was hired in 2000. Williams shed lawyers when it spun off subsidiaries …” Set aside the mistaken implication that 39 lawyers amounts to a “smallish” department.

Imagine the disruption and disentanglement when two out of three colleagues go their separate ways in a spinoff (See my post of April 9, 2006: Tyco, Cendant and Wendy’s spin offs listed; Sept. 25, 2006: LANXESS spun off from Bayer Chemicals; Nov. 20, 2006: spun off companies and the size of their law departments (FMC Technologies); March 2, 2008: Spectra Energy spun off from Duke Power; Feb. 15, 2009: tough early years for a law department of a spin-off and mentions Kraft from Philip Morris, Catalent from Cardinal Health; and Jan. 21, 2011: Fortune Brands, Motorola, Sara Lee, ITT and Cargill.).

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Data will play an increasingly important role for general counsel as they navigate the turbulent years, so I should add three more sources of such data (See my post of June 16, 2010: six pools of management data for general counsel.).

Acritas produces its Smart Legal Brands report with a wide variety of quantitative findings (See my post of Aug. 2, 2010: average hourly rates; Aug. 2, 2010: definitions of value; Aug. 3, 2010: legal intensity by industry; Aug. 3, 2010: cost is low on ratings list; Aug. 6, 2010: negativity toward offshoring; and Aug. 9, 2010: US-based law departments compared to others.).

Organizational network analysis (ONA). At least one law firm has moved to use this tool and there is an article, I am told, about law firms and ONA (See my post of May 11, 2010: social network analysis with 6 references.).

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