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Stimulated by a question asked of me by a leading general counsel, I researched the differences between the titles “General Counsel” and “Chief Legal Officer.” Some posts here offered background (See my post of March 23, 2005: title expansion and more frequent appearance of CLO; March 22, 2006: differentiates “general counsel” and “chief legal officer”; May 4, 2007: European counterparts as “Head of legal” and “Legal Director; and Dec. 5, 2011: post on this blog with the most number of visits was about the distinction.).

The CLO title is definitely of more recent vintage and is also less frequent than the GC title. Data to support this belief is not known to me, but that is the impression I have from consulting, reading and my posts here (See my post of Dec. 31, 2007: Wikipedia entries for CLO and GC; Jan. 19, 2008: LinkedIn search found “general counsel” had more than 500 profiles while “chief legal officer” had 106; and Oct. 12, 2009: can only persons with bar licenses in the US be “general counsel”.).

Where the title is bestowed, it seems to be higher ranking, with more corporate muscle, than “general counsel” (See my post of Nov. 6, 2007: CLOs get more equity awards than GCs; and April 24, 2009: salary differences between CLO and GC positions.).

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TyMetrix has produced the “Litigation Rate Snapshot,” based on its LegalVIEW data warehouse of billing and matter information. Covering $15 billion in fees submitted by 147,000 individual U.S. billers, a table shows average rates paid associates and partners in five industry groups. For three of them (Finance, Investments and Banking; Manufacturing; and Retail), the increment from associate to partner rate is about $100 an hour.

For Insurance and Health Care, both rates are noticeably lower than those paid by the other industry groups and the associate-to-partner gap is half as much. Reversing that, for Technology and Telecommunications the average rates are considerably higher and the gap is nearly twice as much, $200.

Now, draw on some other metrics. In the Fifth Release of the GC Metrics benchmark survey, external spend as a percentage of revenue for Manufacturing (112 companies, about 60% US) is twice that of Retail (44 companies), yet the TyMetrix average litigation rates are nearly the same. Since litigation accounts for 50-70 percent of all external spend, these two streams of data suggest Manufacturing companies face twice as much litigation expense as Retail companies. That sounds right.

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TyMetrix has produced an 8-page handout, the “Litigation Rate Snapshot,” based on its LegalVIEW data warehouse of billing and matter information. The full report covers $15 billion in fees submitted by 10,000 U.S. law firms and 147,000 individual billers. The total hours reached 39 million.

At the most aggregated level, therefore, the blended rate for all those fees and hours comes to $385 an hour. That rate reflects all write-offs and approvals, so the submitted blended hourly rate was somewhat higher. Since the counterpart figure for U.S. legal departments comes in just below $200, this appears to put an outside litigation hour at twice the cost of an inside hour.

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For years there has been a plain English movement that has sought to simplify and clarify government documents and commercial agreements. A further development may be Transparency Labs. Its goal is to help consumers understand so-called “fine print” in contracts.

“Our team of experts starts by spending hundreds of hours analyzing individual fine print documents and labeling their constituent contract terms. These are the “genes” that make up the fine print. We map these genes along vectors, which enable us to compare one fine print agreement to another. Using this data, we can also create benchmarks to measure relative concepts like language complexity and consumer friendliness.”

That paragraph, dense with provocative concepts like genes, vectors and benchmarks, suggests all manner of analysis that could be possible for contracts worked on by legal departments. Further, Transparency Labs applies ideas from information architecture and visualization to make contracts clearer. Wouldn’t it be exciting to see a patent licensing agreement analyzed with these tools against counterpart agreements and then its key provisions displayed graphically?

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Value of equity awards. I heard recently that a “binomial calculation” is more complex than Black-Scholes but more accurate (See my post of Jan. 17, 2006: Black-Scholes formula uses standard deviations; Jan. 24, 2006: software to calculate the formula; July 25, 2007: the binomial method; July 27, 2007: the lattice-binomial method of valuation; and Jan. 20, 2009: restricted stock.). That compensation expert told me that as a rough rule of thumb the value of an option is 1/3rd of the stock price when awarded. He also mentioned FAS 127 and FAS 123r that promulgate rules about these calculations.

ACC membership numbers from Docket circulation. The ACC Docket Statement of Ownership, dated Oct. 20, 2011 and published in December (at 94), says that the organization averaged during the previous 12 months 24,153 “mailed outside county paid subscriptions.” (I’m not sure if copies mailed within DC, presumably the “county” of ACC, adds to that number.) They also averaged 2,819 “paid subscriptions outside the mails”. Doesn’t this suggest that the membership of the Association of Corporate Counsel was just above 24,000 during that period?

Complexity increase over time in software license agreements. SmartMoney, Feb. 2012 at 59, cites research by NYU School of Law on the elaboration of software license agreements. From 2003 until 2010, the average number of words in those agreements grew from 1,615 to 2,235. That increase of 38.4 percent in 7 years bespeaks the increasing legal concerns of software publishers – and perhaps the general trend for contracts to metastasize.

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If general counsel understate the cost of an in-house attorney hour, perhaps by assuming a high number of chargeable hours a year or only including base salaries, they are mistaken. In the ABA J., Jan. 2012 at 26, for example, a general counsel of a huge real estate management firm “notes the average cost to employ an experienced in-house lawyer is $125 an hour, a bargain compared to many firm rates.”

Actually, for U.S. law departments, according to 478 who are in the final release of the General Counsel metrics benchmark survey, the fully-loaded figure is $193 (assuming 1,800 chargeable hours per year). Thus, the quoted general counsel operates on an assumption approximately 50 percent too low. Even more, he mentions “experienced” in-house lawyers, who probably turn over the meter even faster.

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In 2005, a group of in-house counsel coalesced, all women, all the top intellectual property lawyers in their respective companies. They cleverly called themselves Chipsters – CHiefIP lawyers – and they have continued to meet. The lawyers worked or still work at such IP powerhouses as Apple, Alta, Cadence Design Systems, Cisco, eBay, Google, and Intuit. The seven members organize three or four informational and networking sessions each year. You can learn more from the ABA J., Jan. 2012 at 23-4.

Chipsters illustrates the benefits of gathering like-minded in-house counsel: mentoring, knowledge-sharing, networking, and friendship.

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I like some rules promulgated by Nick Jarrett-Kerr of Edge International in the firm’s latest Communique. Written for law firm managing partners, the advice holds true for general counsel.

“Rule 1: not many decisions are very important.

Rule 2: the most important decisions are often made by default.” [Jerrett-Kerr doesn’t write this but I urge my consulting clients to spend 80% of their time on the very few decisions that are likely to set in train the most important consequences.]

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An interview of Thomas Russo, general counsel of AIG since early 2010, appears in Corp. Counsel, Dec. 2011 at 18. It says that Russo has fifteen direct reports, which crowns him champion of that list in my book. That is a very large number of people to evaluate, respond to, meet with, mediate among, and rely on (See my post of May 29, 2009: direct reports to the general counsel with 12 references.).

In law departments of up to six or so attorneys, the general counsel may directly supervise all of the attorneys. They all are “direct reports.” As departments add lawyers, however, some of the more junior lawyers report to one of the direct reports. How many direct reports a general has varies widely as that number depends on a range of factors, primarily the total number of lawyers in the department.

Since the first compilation, cited above, I have written about direct reports eight more times (See my post of Oct. 27, 2009: determinants of the number; Jan. 7, 2010: management initiatives per direct report; Feb. 9, 2010: Clorox, with 30 lawyers, has four direct reports; March 9, 2010: assumption of four or five if department is sizeable enough; March 29, 2010: succession planning; May 26, 2010: heterogeneity may degrade direct reports’ performance; May 10, 2011: delegation of authority to direct reports; and July 6, 2011: when to create a third reporting level.).

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An interview of Thomas Russo, who became the general counsel of AIG in early 2010, appears in Corp. Counsel, Dec. 2011 at 18. In addition to being a senior executive of the company he views his role as having another component: “administering a department that has approximately 1,400 people in it, about 500 lawyers, and has outside legal fees of slightly south of $500 million (not including claims).” Russo’s choice of the term “administering” interests me, but I may be indulging in semantic hair-splitting.

The term “managing a law department” appears much more commonly than “administering” a department. Russo conception and terminology takes a very high-level view: “Administrative means looking at all the different legal, regulatory, and compliance functions. Making sure that the right people are there.” To administer is to be concerned with the highest-level of structure and function, and that the right lieutenants are in charge. “Managing” means dirtier hands, to some degree shoveling at the coal face. And “leading” evokes inspiration, charisma, crisis and vision (See my post of Dec. 29, 2008 #1: compares business plan to strategic plan like management to leadership.). These definitional niceties may be over-wrought or they may touch on meaningful distinctions between three views of the top lawyer’s managerial role.