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Legal agreements put off clients because they are dense, inter-connected, and one dimensional, in the sense that they are dense, linear text. Were there tools to show the provisions of an agreement visually, both clients and lawyers would gain. This blog has foreshadowed this idea but never explicitly proposed the solution: concept-depiction software (See my post of Nov. 28, 2005: mind mapping software; Feb. 23, 2006: argument diagramming; and May 10, 2006: influence diagrams; Feb. 16, 2008: flow chart a complex process; March 7, 2006: TQM tools such as cause-and-effect diagrams; Jan. 6, 2009: visual presentation of ideas; May 15, 2009: idea relationship software with 6 references; Feb. 8, 2011: digraphs to show tasks, time, and dependencies; Jan. 19, 2012: Transparency Labs and contract illustration.).

If key parts of an agreement were transformed into circles of various sizes according to their importance, for instance, and perhaps colored to show whether they concern potential liability or potential benefit, and lines linked the term circles to defined terms or related provisions, everyone could fathom complex agreements better.

Text lags behind diagrams when it comes to depicting causal relations. What influences what and how that is related to something else can be described in words, thousands of words sometimes, but a picture does it instantly. Venn diagrams, decision trees, data visualization, and patent landscapes also give a visual sense of concepts. The tools of visual presentation are poorly used in law departments.

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Managers in legal departments will do better to the degree they apply the lessons from these related disciplines. Art Markman, Smart Thinking: three essential keys to solve problems, innovate and get things done (Perigree 2012) brings out differences between psychology and cognitive science. As he describes the two fields, psychologists aim for the scientific study of the mind. Whether the characteristic is cognitive dissonance, working memory compared to long-term memory, risk aversion, status envy, or innumerable others, their focus is external manifestations of the mind. Studies, experiments, and observations look at how humans think from behaviors we can mostly observe.

Across the aisle are the cognitive scientists, who study within the brain. They explore our cranial wiring, parts of the brain that handle various functions, and neurological characteristics of our brain workings. It is the physical world of dendrites, synapses, electro-chemical stimulation, and FMRI’s that undergirds overt psychology, I believe, but both fields of inquiry and management insight stand on their own.

Sociology may be psychology writ large and configured by how groups of people co-exist, yet it is distinctly another level of inquiry and theory. The behavior of crowds, personal space, social support and ostracism, culture – all swarm with much more throughout sociology. Behind all these disciplines looms evolution, the exigent shaper of humanity and how we operate.

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Profit & Law, Helene Trink’s consultancy in France, recently published its survey report of 119 heads of legal (directeurs juridiques) in France. Of that group, 62 provided enough data to permit Trink to calculate their total legal budget, covering both internal and external costs, as a percentage of their 2010 corporate revenue.

At the median, the figure was 0.17%, which is half or less of the comparable figure from U.S. participants in the General Counsel Metrics survey. At the first quartile, the figure was 0.07% whereas at the third quartile, 0.44%. We should note that Trink’s data is in Euros, but the normalization of the figures, legal spend divided by revenue, renders that irrelevant when the resulting metric is compared to US dollars or any other currency.

It is likely that relatively more litigation, intellectual property costs, and government investigations drive up the U.S. spend. Also, some of Trink’s respondents cover only France. The median for departments reporting worldwide figures (at page 14, for 31 companies) was 0.32%. That figure comes closer to the prevailing U.S. standard, probably because it includes spend in the costlier U.S.

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“Path dependence” describes situations in a law department where “a decision made early on for one reason … influences behavior long after that reason is irrelevant.” Art Markman, Smart Thinking: three essential keys to solve problems, innovate and get things done (Perigree 2012) at 28-29, gives the example of the QWERTY keyboard. Supposedly designed to prevent mechanical keys from jamming, we are still saddled with a very inefficient layout of keys long after computers have obviated the risk.

Path dependence shows up all the time in law departments. That compliance does or does not report to the general counsel may have been set years ago because of the personality of the first head of compliance, long since retired, but whose legacy today determines the a key structural component. Or path dependence explains why business unit lawyers in Asia report to the regional VP but the lawyers based in Europe report to the global general counsel. Path dependence presents obstacles to law departments that want to inoculate themselves with another department’s “best practice” (See my post of Nov. 25, 2009 #2: path dependency obstructs borrowed practices.). When we questions our assumptions, especially the sacred cows, we may be able to spot the path dependencies and test them for present-day applicability.

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Those who manage in-house lawyers sometimes interchange the terms “talent” and “skill.” They have, however, different meanings and it is our loss to blur them.

“Talent” concerns innate abilities, along the lines of a melodious voice, athleticism, humor, intelligence, and spatial sensibility. Bestowed at birth, perhaps genetically programmed, plastic under encouragement (Mozart’s father) or suppression (Taliban girls), talent distinguishes people as a gift from birth.

“Skills” we can deliberately learn or less consciously absorb. Any corporate lawyer can become a skilled writer who takes the time to study grammar, composition, and style, makes an effort to edit and improve, reads quality prose, and generally tries to increase writing prowess. Other skills develop less deliberately but more by osmosis. If you watch someone experienced select jury members, and if you attend to the questions asked and the objections made, your skill should improve. You can’t practice and teach yourself as readily as with writing, but you can absorb the elements that lead to mastery.

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Writing in the ACC Docket, Jan./Feb. 2012 at 18, Ron Pol discusses some of the financial and ethical pitfalls of fixed fees. He cites the frustrated managing partner of a major law firm: “In-house counsel often seek alternatives to hourly rates, then demand hours and rate information as well, forcing the firm to accept the lowest figure – whether that be the agreed retainer (‘as we agreed to pay’) or time cost (‘it would be unfair to pay more than your time cost’). The firm has now all but given up trying to be innovative.”

Like Pol, I recommend against creating that bind. If you negotiate a fixed price, you have settled on the value you seek for what you are willing to pay. It is the firm’s privilege to provide that value – and to make as much profit as they can from the deal. It’s not fair to have heads I win, tails the firm loses.

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The Economist, Dec. 17, 2011 at 116, discusses the well-worn arguments regarding relative innovativeness between bigger and smaller companies. The editorial adds two points: (1) larger companies excel more at incremental improvements than radical change and (2) the growth rates of companies correlate more with innovation than do their size.

The points do not carry over well to law departments, but it feels logical that big departments – fifty or more lawyers, let’s say – find it harder to transform a practice of theirs than do smaller, more nimble shall we say, departments. The smaller ones have fewer vested interests, less encrustation from history, a smaller number of handoffs and interconnections affected.

As to the second point, when a law department rides the steady growth of the company it serves, surely there are more reasons and resources in favor of change. Expansion creates opportunities and nourishes innovation.

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Last year’s ALM survey asked about 14 functional areas and whether the chief legal officer supervised it or some other executive did. Unsurprisingly, for more than two out of three respondents, the top lawyer was by a large margin responsible for Compliance, Corporate Secretary, Patents, and Trademarks. On the other hand, it was very unusual for two functions to report to the general counsel: Human Resources and Tax (although a handful did have that arrangement). Roughly on the order of one-out-of-three general counsel had reporting oversight of Corporate Security, Environment Health & Safety, or Risk Management.

The “ties,” where it was as likely for the office of the general counsel to hold reporting responsibility as for another executive, were Government Relations and Insured Claims Settlement. To learn more about the Law Department Metrics Benchmark Survey of ALM Legal Intelligence, click here for ALM’s website. http://www.almlegalintelligence.com/r5/showkiosk.asp?listing_id=3445502

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At a fundamental level, the output of a legal department, both quality and quantity, depends on how diligently its members work. Ability counts, hugely, but sheer doggedness and concentration goes a very long way. So, when I read in the NY Times, Feb. 26, 2012 at BU8, about “research showing that the average employee admits to wasting two hours a day on nonwork tasks,” I wasted no time to busy myself on this post.

We may never have solid numbers on the number of hours logged by in-house counsel, let alone how many of those hours are “wasted.” For many reasons, none of that will gel. I don’t trust self-reported hours from in-house counsel, to say nothing of numbers pulled out of the air by survey takers.

The article claims that one out of five people are chronic procrastinators. Try proving that number! It does point out that more productive people tend to focus on progress over perfection. For in-house lawyers, too, it is sound advice: Keeping moving the ball along and correct your course as you go.

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Some 70 law departments that provided data to an ALM survey last year responded to a question about e-billing. Of them, 18 said they use an electronic billing program. The question did not differentiate between matter management and e-billing software, which often is the same these days. For that subset, the median percentage of law firms retained by the company that submitted e- bills was 90 percent and about the same percentage of invoices by amount went through the system.

If we assume that the lack of an answer means no e-billing system, then approximately a quarter of this law department population has put that tool to use, and for nearly all their firms and invoices. That is a higher percentage than uses a matter management system, which doesn’t make sense. Perhaps the finding is an artifact of this particular survey, its question, and the respondent population.