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You can read a full account of the arrangements between Levi Strauss and two firms it selected to handle large swathes of its work on a fixed fee (Orrick, Herrington & Sutcliffe for corporate and commercial work and Kilpatrick Townsend for IP work). The article in the ACC Docket, July/Aug. 2011 at 77, explains the background and current workings of the global deals (See my post of Nov. 25, 2009: Levi Strauss and almost-complete convergence.).

Of particular interest and the topic of this post is that Levi Strauss started the program with a “big swoop” of training. In each of three global regions, the law department invited “all firm and department lawyers working on matters that would be covered by the relationships” to participate in a full-day session. Led by in-house lawyers, the sessions were as practical and open as possible so that the two law firms could come up to speed as quickly as possible and know their colleagues inside the company. This would be a good step for all law departments that start a major partnering arrangement with a law firm.

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A wonderful article in the ACC Docket, July/Aug. 2011 at 29, describes how the law department of Reckitt Benckiser Group, a global consumer products company, had all its 44 in-house lawyers take a psychometric assessment. It was one of several available for law departments, specifically the Caliper Profile (See my post of Nov. 27, 2005: Caliper findings and the skepticism of lawyers.). The company’s lawyers came from 18 countries and worked in 15 of them so they had widely varying backgrounds and styles. The Caliper Profile measures 23 different personality traits and motivational factors such as leadership, problem solving, and time management.

The article compares personality traits common to lawyers to those of business executives and also compares the traits of inside and outside lawyers. It also weaves in Emotional Intelligence and results of a test called the Mayer-Salovey-Caruso Emotional Intelligence test (See my post of Dec. 3, 2007 #4: EI with 5 references.). The article provides much to think about.

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According to an article in the Met. Corp. Counsel, Oct. 2011 at 41, the U.S. law firm Drinker Biddle & Reath, with approximately 650 lawyers, “became the first major law firm to hire a chief value officer.” Law departments that care about the value they obtain from their outside counsel – what departments don’t? – might ask whether their key firms have done something akin to this investment. The Drinker CVO is “charged with incorporating the value concept into the firm’s philosophy and culture: analyzing engagements to determine whether and how they provide clients value; and strategizing long-term value solutions.”

This is all the article states. The cynic in me must be tamed because Drinker at least has its heart in the right place, although I imagine it is extremely difficult for someone even to question the value delivered by partners of a major law firm let alone suggest how they might increase the value they produce. Even if the firm’s action were mostly optics and PR, it gives general counsel a concrete basis to ask about key law firms’ tangible efforts to produce more value.

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What I have referred to on this blog as “document assembly” software others refer to as “contract automation” software. An article by Gabrielle Walker, the general counsel of a leading provider of contract automation software, Business Integrity, offers three points for comment. The article is in the Met. Corp. Counsel, Oct. 2011 at 32.

Point one is that clients, too, can use the software, not just law departments. If clients have access to applications, it allows those “business users to go directly to the customer without being slowed down by the legal department – without compromising the company’s risk tolerance.” That helps everyone, so long as business users don’t alter the approved language of the agreement.

Second, Business Integrity names some corporations that use ContractExpress: Cisco, Cadence, Microsoft, Pepsi, Henkel, AXA PPP Healthcare, and SolarCity. On the website of Business Integrity are listed Amazon, Catholic Healthcare West, Georgia Pacific, Jumeirah, PetSmart, Sodexo and, Standard Chartered. Law department managers respect service providers and vendors who identify at least some of their user base.

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We constantly hear that change is being forced on law departments because of cost control, technology, and globalization. The third, globalization, looks at the increasing international trade and location of companies and presumes associated complexity or amount of legal services needed.

It turns out, however, that law firms who pursued global expansion most vigorously have lagged their domestic counterparts: “adding more lawyers outside a firm’s home country has generally been associated with modestly slower growth in profits per partner.” That conclusion comes from the Economist, Oct. 15, 2011, at 78, citing The American Lawyer.

It seems plausible to me that if law firms’ didn’t fare so well who they set up camp all over the world, it means law departments – at least in the U.S. and U.K. where the biggest law firms roam – were not demanding cross-border legal services. That might be because the law departments met their needs internally; or it might be because global legal issues represent a much smaller piece of the legal whole than is incessantly asserted.

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In the “anything else” category of law department software, the 54 respondents to this year’s ILTA survey of its legal department members came up with a range of software. Workshare for document comparison had the most mentions (8) while the other 10 packages in eight categories had only one each: ReqWired for CLE tracking, Paisley for compliance, WinScribe and Dragon Naturally Speaking for voice recognition, LawLogix for employment, dtSearch for enterprise search, Thomson Innovation and LexisNexis PatBase for intellectual property, Esquire Innovations iCreate for templates, and Thomson CaseMap for trial management.

If these 54 departments have licensed 11 uncommon software packages, as compared to e-billing, matter management, document management and corporate secretary packages that are quite frequent, don’t we wish we had ten times as many respondents so we could gaze with wonder at the plethora of packages in use in-house?

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The general counsel of inefficient law departments don’t want to provide comparative data that confirm they are operating inefficiently. They are probably less likely to choose to participate in benchmark surveys than their fitter counterparts. Not that anyone sees any specific company’s numbers, because the data are aggregated and normalized. Even so, if companies with less flattering benchmark figures systematically don’t take part, perhaps claiming ill-advised concerns about confidentiality, their numbers are not in the data and the benchmark results conceal mediocrity. Published benchmarks, therefore, may be better than what actually and typically prevail.

This is the mischief of self-selection bias. Well-managed departments want to prove their quality so they take part disproportionately in benchmark surveys. What does self-selection cause? Some foundational findings, like total legal spending as a proportion of corporate revenue, may be higher than the benchmarkers state. If only the lean ones weigh themselves, the world is fatter than the resulting medians and averages. There is no mechanism yet by which a large group of law departments must provide figures that test this hypothesis of self selection.

The best we can hope for until then is to have trade groups reach out and urge wider participation among their members. Or, to have benchmarking be seen as simply what everyone does. Sheer numbers of participants means the results are likely to dig deeper and be more representative.

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An article in Sloan Management Review, Fall 2011 at 21, reports 2004 data on the concentration levels of the four largest competitors in 50 industries. That is, in Aircraft the level almost reaches 100 percent, because four companies (Boeing, Airbus, Bombardier and Embrair?) dominate the market completely. Helicopters, smart cards, tobacco, music, and mobile phones all come in around 75 percent. Far less concentrated were steel, pharmaceuticals, insurance and IT services, each being in the 20 percent range.

What might this mean to the legal departments of the top four in any industry that has a concentration ratio above, say, 40 percent? That is the degree of concentration that the authors say results in interdependence in a domestic market and probably in the international market.

Anti-trust concerns lurk around every decision and every action. If your industry is very concentrated, competition law rears up everywhere.

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Some lawyers describe their department as “hierarchical.” I have tried to unravel the concepts in that term because it has many. Five of them are summarized below.

  1. Rank has more than its share of privileges. Distinctions in levels manifest themselves in many ways. Hierarchy has to do with special perquisites for those who are higher on the totem pole.

  2. Information flows up and down chains of command, and mostly, to the extent it does flow, down. Hierarchy has to do with topside control of knowledge about what’s happening.

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Not giving junior lawyers exposure to senior business people harms their development. It helps them feel more engaged and more in the flow of the business. Most law departments suffer from the problem of top lawyers who hoard access to top clients, to put it harshly, or who fail to let lower-level lawyers interact with senior managers, to give it a more humane spin.

For the senior lawyer, wider-spread dealings by those below them lowers the ego rush of proximity to power and the felt-importance resulting from dealing with senior people.

In the longer run, it is better to spread the contacts. The solution is to try hard to bring in junior people to presentations and meetings. Let them step into the limelight in a variety of situations. There is a bit of performance evaluation that naturally goes with that. As a development tool, wider contact helps the law department improve.

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