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The 2011 In-House Counsel Barometer, produced by the Canadian law firm Davies Ward Phillips & Vineberg In association with the Canadian Corporate Counsel Association (CCCA), covers the responses of 864 in-house lawyers in Canada.

The report states at 9 that “one-fifth (19%) of in-house counsel are sole practitioners in their organization and another 23% report that their law department is comprised of 2-3 lawyers.” Based on that distribution from a large number of respondents, the median size of Canadian law departments would be around 4 lawyers, since 42 percent have 3 or fewer, and one more lawyer will push the cumulative percentage beyond the 50% mark.

If lawyers did not come in units of one but were identified by full-time equivalents, the mathematical median might be around 3.2. “Mathematical median” is not a term of art, but tries to convey the “typical” number of lawyers in Canadian law departments if the numbers of lawyers could be stated more precisely than after jumps of one full lawyer at a time. The average won’t work because some very large departments might push the number higher than what I am trying to get at. Perhaps there is an average below the median?

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An article in New England IN-HOUSE, February 2012 at 12, discusses whether in-house counsel who leave a law department are free to join a competitor and practice law. It explains Rule 5.6 of the Rules of Professional Conduct which prohibits restrictions on the right of a lawyer to practice law after termination of the attorney-client relationship. Many states have held that in-house lawyers are also protected by this provision.

The article also argues that these restrictions apply to financial disincentives to lawyers who leave. It says “there is a strong argument that forfeiture agreements dis-incentivize in-house counsel from representing clients of their choosing, and, as such, they are unenforceable.” The article closes with some discussion about protection of confidential information and conflicts of interest. What I took away is that general counsel can’t lock up their talent by such constraints. To learn more contact Russell Beck.

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Diversity & The Bar, Jan./Feb. 2012 at 47, published last year’s survey results that gathered data from hundreds of companies. The full report is available at the website of the Minority Corporate Counsel Association. http://www.mcca.com/data/global/images/Research/mccacldd_book.pdf

For the initiatives discussed in the article, only law departments of much size carry them out. Overall, only 30% of responding legal departments reported having some type of diversity and inclusion program. Notably, the larger the department, the more likely they were to have a program in place. For example, only 14% of the departments with two-to-five attorneys reported having a diversity program, while 87% of respondents with more than 75 attorneys did. Likewise, special outreach or recruiting efforts were rare among departments of less than 25 attorneys. And, similarly only the largest departments track hours billed by outside counsel for specific diversity groups.

Larger departments have a bigger talent pool to fill and manage so it makes sense that they take up diversity efforts more frequently than small law departments.

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Drawing on data from 109 legal departments in France, consultant Helene Trink of Profit & Law reports that lawyers as a percentage of total legal staff is much higher than in American law departments. Her median figure: 77% of the total legal staff are lawyers (1st quartile 63% and third quartile 86%).

As compared to three-quarters of the French law departments being lawyers, the figure is close to a one-half in United States departments. The final report of General Counsel Metrics for 2010 data, with 510 U.S. law departments, was 53%.

Why the large difference? Paralegal positions are much less common among the French departments, which may explain some of that very large gap. Another explanation may be that the French handle more legal work in-house, so they staff a higher proportion of lawyers (See my post of March 7, 2012: about 1.5 lawyers per billion more in French departments.). Third, it is possible that the all-in costs of lawyers to their French employers is relatively less than to U.S. companies, so the French splurge with more lawyers.

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Legal hold software and a cost metric for law departments. Consider an item from KMWorld, Feb. 2012 at S12. “BIA’s legal hold compliance SaaS solution costs less than $2 per user per month.” Does that mean per employee or only per employees who are “custodians.” If that metric can serve as a lodestone for evaluating the cost of other solutions, it will help general counsel make decisions on which solution to license (See my post of Feb. 9, 2012: an award for litigation hold software.).

Another sip of coffee wisdom. According to Bloomberg Bus.Week, Feb. 27, 2012 at 84, pacing and timing are key to the most effective ingestion of coffee: “The first coffee of the day should be the biggest, and drunk the fastest for a big bump. The rest of the day’s doses should be smaller and ingested more slowly.” Chuck the first venti, then tipple (See my post of March 3, 2011 #4: coffee and collaboration.)

Mapping the interconnected features of the brain. The Economist World in 2012 at 153, introduces readers to the Human Connectome Project. The Project has set itself the task of mapping neural features down to around a cubic millimeter of brain tissue, each of which contains hundreds of thousands of nerve cells. “In the cerebral cortex there are about 50 areas for which good maps already exist, but they cover only about a third of the cortex.” Over the next two decades, neurology will be able to contribute to how general counsel hire, evaluate, train and motivate legal staff (See my post of Feb. 28, 2012: Brodmann 10 area.).

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The ALM benchmark survey in 2011 gathered data that broke down participants’ external spend. Some thirty departments gave figures for their outside counsel spend as well as for their external spend other than outside counsel, such as expert witnesses, patent maintenance and filing fees, directors’ costs, etc. The median ratio between those two figures came out as $10 spent on law firms for every dollar spent on other external expenses. Stated differently, about 90% of external spend for those U.S. legal departments goes to law firms.

That seems a useful benchmark, except a general counsel can influence it. A law department that pays some large disbursements directly will appear quite different than another department that pays the law firm and includes the disbursements in the firm’s invoice. Some spending can be internal or external depending on the choice of payment process. That variability admitted, the 10-to-1 ratio sounds about right.

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Whenever a law firm agrees to a fee to handle all the work of a defined kind for a set period, what is known as a fixed-fee agreement, that firm should be granted a corresponding ability to influence what the company does that triggers the work. The firm should be permitted, indeed encouraged, to educate clients, improve procedures, alter settings, make available tools, or otherwise have the company take steps to reduce the flow of those kinds of matters.

Otherwise, the firm could be at the mercy of a perverse incentive: “Hey, who cares what happens, since XYZ firm has committed to take care of it for a set price.” The moral hazard that accompanies all free goods and services becomes obvious.

If the firm can train store managers, intervene on the quality assurance steps, suggest better ways for complaints to be handled, or all such improvements without over-reaching management’s prerogatives and responsibilities, then those rights better align the fairness of the economic arrangement.

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It is mildly exasperating and disappointing to hear the same examples time after time from the dais. Can’t speakers come up with something other than “Focus on strategic work, [pause as if pondering] such as bet-the-company litigation.” Can’t they offer something else? Or “Push your law firms to be innovative, [pause as if considering among choices] such as alternative fee arrangements.” Really, haven’t heard that one before! Or the chestnut of “Be sure the work is done as efficiently as possible, such as with delegation.” Take my breath away! Are people thinking when they wheel out “Share knowledge, such as with an intranet”?

Right, you say, each of these shop-worn examples makes brilliant sense to someone in the audience who has been hidden under a rock or whose name is van Winkle. Right, some consultants who write arrogant and snarky posts about over-used examples should realize that not everyone is immersed in management-speak.

All I urge is that speakers and writers reach beyond the reflexive instances and offer something else. If nothing else comes to mind, then the supposed advice stands emptier, an emperor with barely any clothes.

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I propose that the term “direct report” should apply only in those law departments that have at least one lawyer reporting to at least one non-GC lawyer. By this criterion, a six-lawyer department where all five report to the general counsel would have no “direct reports.” Yet, add one junior lawyer who reports to one of the five and all five of them could proudly call themselves “direct reports to the general counsel.” After all, the term itself suggests there are “indirect” reports – lawyers who are two levels or more below the general counsel.

A tougher definition, in the sense of being more exclusive, would restrict the designation “direct report” to those lawyers who have at least one lawyer reporting to them (or one person other than an administrative assistant or paralegal). In the example above, only one lawyer, by virtue of supervising the junior lawyer, would be entitled to be called a “direct report.”

If the law department world adopted either definition, it would drastically reduce the number of “direct reports” since so many law departments are so small that every lawyer reports to the top lawyer. Many in-house lawyers might object to both of these definitions because they will lose some resume-appeal.

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In her most recent benchmark report, Helene Trink, head of the French consultancy Profit & Law, published 2010 data on 75 law departments in France and their lawyer headcount. At the median, the number of lawyers per billion Euros of revenue was 8.5. If we take the Euro exchange rate as $1.75 dollars per Euro, that works out to be 6.4 lawyers per billion U.S. dollars. The final report of General Counsel Metrics has 2010 data for 510 U.S. law departments. The comparable figure was 4.8 lawyers per billion. A difference of a lawyer and half per billion deserves some explanation.

The first quartile legal department had 3.6 per billion Euros (2.7per billion dollars) while the fourth quartile had 16.9 (12.7 per billion dollars). The French departments have insourced more work than their U.S. counterparts, which in part explains their lower total legal spending as a share of revenue (See my post of March 6, 2012: French data on legal-to-revenue ratios.).

This shift appears even more clearly because the percentage of internal legal spend to total legal spend is at the median 50%. For U.S. departments, a ratio of 40/60 with the tilt to external spending is more common.