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This blog has described what psychologists call the halo effect (See my post of April 13, 2007: “the tendency to make specific inferences on the basis of a general impression.”). Stylish clothes improve the assessments we make of the wearer’s unrelated attributes. Good looking people get the benefit of being thought more capable; a partner from an illustrious firm is unthinkingly presumed to be blessed with better legal ability.

The halo effect is one of many tricks our fast-reacting System 1 can play on us, as well described by Daniel Kahneman, Thinking, Fast and Slow (Farrar, Straus & Giroux 2011) at Chapter 7. If you know that your colleague graduated Yale Law School, that actually says little about her PowerPoint skills, despite the glow of the halo. System 1 jumps to conclusions and spreads its thumb-nail impressions promiscuously, whereas System 2 thinking can more deliberately seek multiple sources of assessment, such as having someone else who is unaware of the pedigree read a document written by the colleague (at 84-85).

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Posted in: Talent
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For several years, law departments with matter management systems have struggled to adapt (contort?) those systems to handle the various volume discount arrangements the departments craft. One law firm might have a tiered discount arrangement, another has very different tiers, while a third triggers retroactive discounts at some level and a fourth has some hourly matters and some discounted matters where the discount rises with volume. The infinite variations stumped some matter management packages.

When I read in Met. Corp. Counsel, Nov. 2011 at 30, the article by Jeff Schuett, the VP and GM of LexisNexis CounselLink about that package’s volume discount feature, I commend it. Assuming it can smoothly handle the profusion of discounts applied upon defined amounts of total fees being reached, it will help obsolete makeshift methods.

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The new general counsel for the North American operations of the Rilin Group, a China-based sea transportation and wind-power company, had previously been a court of claims judge in New York State. Robert Holdman resigned because he could not afford to remain in the $135,700 a year judicial position. This career shift was reported in Corp. Counsel, Nov. 2011 at 19.

General counsel have come from business roles, such as MetLife’s former top lawyer, but I could think of only one other person who moved from the bench to the benchmarkers (so to speak): a Ninth Circuit Court of Appeals Judge, Michael Luttig, became the general counsel of Boeing. Come to think of it, I can’t think of any former general counsel who have left their position to grab the gavel.

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Posted in: Talent
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Describing new developments in CounselLink, Jeff Schuett, its VP and GM at LexisNexis described one particular addition that deserves note from Met. Corp. Counsel, Nov. 2011 at 30. The matter management software has a new feature that “can support existing agreements, allowing clients to publish the billing rules, manage the partnership, set expectations and establish clear communications regarding exceptions and compliance.”

This makes sense to me. Other providers of matter management and e-billing software may have equivalent functions in their software, but I am not aware of them. So my hat’s off to CounselLink for a useful development for legal departments. True, some claims are a bit grand, particularly “manage the partnership” and “establish clear communications,” but I grant some leeway to marketing spin. Even with capabilities stripped down, to have the ability to link guidelines more closely to matter tracking represents a significant benefit.

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An essential attribute of a good lawyer is the ability to think clearly. It appears, however, that whatever goes on inside a human’s brain when it is processing input has two radically different personas: an impulsive, intuitive, impressionable, pattern-creating function and a more deliberate, evaluative, orderly and demanding function. Hence two Systems and the title of Daniel Kahneman, Thinking, Fast and Slow (Farrar, Straus & Giroux 2011).

Kahneman describes the fast one, which he calls System 1, as one that takes whatever “facts” are easily at hand and creates a causal narrative (See 105 for an excellent summary). System 2 “can follow rules, compare objects on several attributes, and make deliberate choices between options” (at 36); it is more cautious and it is, when personified, lazy.

Kahneman’s fascinating book repeatedly shows the waywardness of System 1, and the challenge our System 2 has to modulate it or think more deeply. But to harness System 2 requires self-control. Many circumstances weaken self control: fatigue, stress, alcohol, low blood sugar, lack of sleep, illness. A sound mind in a sound body sums it up (See my post of May 18, 2007: stress and pressure with 7 references; June 11, 2008: stress with 18 references; July 30, 2010: anxiety and pressure with 9 references; and June 29, 2009: sleep with 10 references.).

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Posted in: Thinking
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In Charles Seife, Proofiness: How you’re being fooled by the numbers (Penguin 2010) at 108, a point is made that has bearing on the survey instruments in the header and their findings. “When surveys and polls depend on voluntary response, it’s almost always the case that people with strong opinions tend to respond much more often than those who don’t have strong opinions. This introduces a bias: the poll disproportionately reflects extreme opinions at the expense of moderate ones.”

Worse, “People are relatively silent when they’re reasonably content, but if they’re angry they tend to shout it from the mountaintop.” What might this phenomenon say about data on dissatisfaction with law firms, with law departments or with software vendors (See my post of May 3, 2009: data that belies this claim; and June 26, 2008: CEOs and their views of law departments.)? We hear from the loudmouths, not the silent majority.

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Cognitive psychologists generally believe that ideas, somehow and by some means not yet fathomed, surface or are created from a neural network of associative memories. This view is according to Daniel Kahneman, Thinking, Fast and Slow (Farrar, Straus & Giroux 2011) at Chapter 4. Our first reaction to something, what he calls the fast, System 1 part of our minds, almost instantaneously links a perception to associated memories and other neural material. On that basis, “creativity is associative memory that works exceptionally well” (at 67).

Without us even realizing it, however, we can be influenced toward or against network links: in cognitive terminology, we can be primed.

If a conference room has a statue of Rodin’s Thinker next to a quote from Goethe about the potential of reasoned decisions and a reproduction of Vermeer’s The Procuress, those in the conference room will be subconsciously primed to deliberate more effectively. Even our physical actions can be primed (the ideomotor effect) such as when we hear or read words about old age and then walk more slowly – without the slightest recognition of the priming instigator.

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Posted in: Thinking
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The ALM benchmark survey, released in September, covers 99 companies. The average number of law firms employed in 2010 by the subset of those companies earning between $1 billion and $4.9 billion was 43. Very roughly, that revenue range typically corresponds to 5-25 lawyers in-house. If 10 were the mid-point, the average would come down to a bit more than four law firms per in-house lawyer.

This blog has no clear formulation of law firms per inside lawyer (See my post of Feb. 11, 2007: rule of thumb of three primary firms per in-house lawyer; July 17, 2009: law firms and vendors per user; April 16, 2010: rough estimate of two firms per lawyer; and May 12, 2010: six outside law firms per inside lawyer at Cox Communications.).

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Sylvia Nasar describes a remarkable theory and empirical finding by the Nobel Laureate economist, Robert Solow: “Nine-tenths of the doubling in output per worker in the United States between 1909 and 1949 was due neither to the accumulation of physical plant nor to improvements in the health or education of the labor force, but rather to technological progress.” The quote from her book Grand Pursuit: the story of economic genius (Simon & Schuster 2011) at 443 set me on two paths of thought.

One path suggests that productivity increases in law departments have little to do with anything physical (other than computers) or any amount of CLE or professional development, including productivity enhancements such as teamwork. Productivity gains follow from software used better.

The other path my thoughts took were to the definition of technology. We immediately think of computers and software, but Solow’s term might also embrace systems and processes. “Technological progress” could be a broader set of improvements than simply those that depend on silicon chips and software code.

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An idea, possibly daft, occurred to me regarding disclosures mandated by the SEC. Would that agency conclude that investors would benefit from having comparative data on legal spend? Would that information materially help the equity markets? If so, would it have the power to require listed U.S. companies to state their total legal spending during their fiscal years reported on? Since legal spend amounts to approximately half of a cent for every dollar of revenue, it may equal something like the compensation granted the five most highly paid officers, which must be disclosed. The impetus for that disclosure goes far beyond simple totals. I thought of this as I read Sylvia Nasar, Grand Pursuit: the story of economic genius (Simon & Schuster 2011) at 305.

After all, companies have to describe material legal liabilities. In 2006 the SEC mandated that companies where boards use peer groups to set compensation must disclose the peer firms. So, might the SEC step into law department benchmarks?