Attorney-client privilege II (See my post of Feb. 28, 2012: attorney-client privilege with 13 references.).
Boards and GCs (See my post of May 13, 2012: general counsel and boards of directors with 9 references and 1 meta.).
Budgets, quarterly (See my post of May 30, 2012: seek quarterly budgets from firms with 8 references.).
Alternatives, published by of the International Institute for Conflict Prevention & Resolution, May, 2012 at 120, mentions ongoing work on a site that will enable certain kinds of disputes to be resolved on the internet. Specifically it explains that the Uncitral Working Group III Online Dispute Resolution initiative has enlisted Modria, a software company, into the working group to create an online dispute resolution platform.
The goal of the working group is to “develop tools to be applied to high-volume, low-value cases characteristic of E-commerce.” Law departments should welcome any aids that enable them to efficiently resolve cost-of-business disputes with consumers. This particular one may have an algorithmic basis for settling the disputes along the lines of a model that eBay uses. The CEO of Modria stated that eBay settles 90% of its disputes without human involvement (See my post of Dec. 31, 2006: online arbitration systems; and Oct. 20, 2009: online dispute resolution and two sites mentioned.).
Those who follow the field of alternative dispute resolution can find a trove of recent empirical research described in Alternatives, the newsletter of the International Institute for Conflict Prevention & Resolution, May, 2012 at 118. The issue summarizes four research programs and their findings regarding corporate legal practice and ADR.
Referred to are “a Cornell University/CPR Institute/Pepperdine University School of Law survey of the Fortune 1000; the 2011 RAND Report on Business-To-Business Arbitration in the United States [with 121 respondents]; The Deloitte Global Corporate Counsel Report 2011; and the 2010 International Arbitration Survey conducted at Queen Mary [the School of International Arbitration], University of London, in conjunction with White & Case [136 respondents to a survey and 67 interviews].”
Since my last metapost on arbitration, I have written several more posts (See my post of Feb. 4, 2008: regression analysis of customer arbitrations; Dec. 6, 2008: techniques favored by mediators; July 29, 2009: costs of commercial arbitration; Nov. 8, 2009: costs of arbitrators as compared to costs of the arbitration; Dec. 14, 2009: a clever rating system of arbitrators and mediators; June 2, 2010: data on forums for international arbitrations; Sept. 12, 2010: a resource to find neutral arbitrators and mediators; Feb. 11, 2011: group of in-house lawyers unite to reform international arbitration; Dec. 28, 2011 #4: infrequency of arbitrations among U.S. companies; and Dec. 30, 2011: 5 to 1 major lawsuits to major arbitrations.).
Realistic in-house counsel accept that the accuracy of a law firm’s budget declines precipitously the farther out it goes (See my post of Aug. 4, 2009: use a funnel metaphor for budgets; Oct. 22, 2008: build for flexibility rather than strive for prediction; July 9, 2009: obtain budget scenarios instead of single figures; and Nov. 3, 2009: twists and turns when you test the accuracy of law firm budgets.).
A budget re-submission for major matters each quarter makes sense (See my post of April 27, 2005: Cummins and budget no farther than your headlights; March 4, 2008: budget out about a quarter at Time Warner Cable; Jan. 21, 2009: JDS Uniphase and its quarterly updates; March 29, 2009: review budgets every three months; May 6, 2009: meaning of “budget” vs. “forecast”; Aug. 11, 2009: McKinsey recommends quarterly budgets; May 11, 2011: thoughts on budget time frames; and June 2, 2011: e-Bay’s practice.).
The CFO, unfortunately, may still insist on a place-holder figure for the annual budget. This tension between pragmatic usefulness and these-are-the-rules guesstimates will never be resolved.
On a panel recently, a speaker urged the attendees, all from law departments, to request from their outside counsel what he called an “activity budget.” Rather than a money projection of what the firm’s services were expected to cost for the budget period, the information he requests is what the firm proposes to do during the period – its activities. Projected tasks and outcomes make clearer the strategy of the firm, the pace it proposes to follow, and many of the assumptions driving its case plan.
Even better: combine a spend budget with an activity budget and top it off with a careful review and critique of both by the responsible in-house lawyer.
Organizations that collect compensation and benchmark data gravitate toward large law departments. They want to boast about the impressive number of lawyers among their respondents, the gargantuan revenue they support, and the league-table rankings of their participants.
The downside of the Fortune fetish is that the resulting metrics do not match well for the four more numerous smaller legal departments, who operate under different constraints. Compensation figures, especially, skew much higher for large departments. A recent post underscored this “income inequality.” The median cash compensation of a set of general counsel of smaller companies was less than the median cash compensation of specialist lawyers at predominantly large departments (See my post of May 23, 2012: preliminary data on compensation from General Counsel Metrics.).
Observers of the law department scene incessantly complain about thickets of regulations that drive up legal complexity and costs and they bemoan even more burdens on legal departments as regulations metastasize. But wait, here is the Economist, May 19, 2012, flying in the face of that dire prospect: “Many businesses, particularly in Europe, face deregulation as lagging economies seek to boost competitiveness through structural reform.”
As much of the growth of U.S. companies will come from the not-yet-mature markets of other countries, including Europe, the longer-term trend may be for relatively less legal regulation (See my post of March 28, 2011: costs of regulation and value of law department with 7 references.).
Let me propose a metric to show a law department’s value, based on the degree to which its lawyers are based in countries in proportion to the revenue from that country. In that regard, during the past two years, this blog has commented on several law departments with many locations of their lawyers (See my post of Jan. 12, 2012: P&G with 20 sites; March 28, 2011: Google with 21 and AB InBev with more than 20; and June 8, 2011: Wellpoint with 28 locations.).
The blog has skirted the quantification I am here proposing (See my post of Nov. 20, 2007: global law department if it has 10+ locations outside HQ country; Dec. 31, 2010: the “nerve center” where many specialist lawyers have offices; Feb. 28, 2012: attorney-client privilege headaches of multiple foreign offices; Oct. 17, 2011: dispersed lawyers characteristic of concentrated global industries; and Nov. 24, 2011: law departments of non-U.S. companies are more likely to be geographically dispersed.).
We could measure proximity of counsel to corporate revenue. If the proportion of a company’s revenue that comes from a country (or a region) matches the proportion of its in-house attorneys based in that country or region, the metric would be 1. To the degree that lawyers don’t follow the money, that number will decline (See my post of April 16, 2012: locate lawyers where revenue, and thus legal work, is generated.). For example, if 10 countries each account for 10% of a company’s earnings, but all its in-house lawyers are in one of those countries, the metric would be 0.1.
We hear all the time praise for law departments that innovate. Do something new, General Counsel are told, to keep up in the competitive race and make the cover of a trade journal. In fact, it may be far more effective to copy what other law departments do and perhaps add your own wrinkle. This is the message of an essay in the Economist, May 12, 2012 at 76. It flat-out states that “history shows that imitators often end up winners.” According to a recent book on this subject, “studies show that imitators do at least as well and often better from any new product as innovators do.”
The media’s obsession with novelty shortchanges the effectiveness of borrowing ideas from others. The adoption of an idea that is borrowed – referred to often as a best practice – calls for its own competencies, and combinations of borrowed ideas can result in something we might deem to be innovative. Blatant copying of practices from other law departments should be welcomed and should be honored by those who give awards mostly to departments that pioneer (See my post of May 24, 2010: innovation and creativity with 6 metaposts.).
A new financial exchange, called IPXI, will let companies buy, sell and hedge patent rights. On the exchange, companies will be able to buy and sell “unit license rights,” which is a one-time right to use a particular patented technology in a single product. This is explained in the Economist, May 12, 2012 at 72.
What an exchange like this might mean for law departments is that their lawyers will not have to negotiate so many licenses for intellectual property. That is expensive, time-consuming, and uncertain. Likewise, this alternative means to secure a patent right will lessen the need for outside counsel. To purchase a unit license right will therefore reduce demand for legal resources. Cutting against this forecast, however, it may be that companies will lean on their legal teams to monetize more of the company’s patent portfolios.
IPXI was set up in 2008 by Ocean Tomo. It will not be until later this year, however, that the exchange is open for business (See my post of Jan. 16, 2006: Ocean Tomo, patent auctioneer; and March 27, 2009: investor in patents.).
