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In mid-2011, at least twenty companies have licensed software to more than a handful of U.S. law department to help them manage matter information. Allegient, BottomLine, Bridgeway, CSC, CTTyMetrix, Datacert, doeLegal, EAG, Legalbill, LexisNexis, LawBase, LT Online, Mitratech, TrialNet, and Serengeti (acquired by Thomson Reuters in 2011) (See my post of Feb. 25, 2009: eight matter management systems at LegalTech New York.).

A post five years ago listed most of them (See my post of July 14, 2006: names 11 companies that offered matter management systems.). An ILTA survey in 2009 included in this niche Practice Manager Group and Legal Files. In truth, it is hard to draw a line around “matter management systems” (See my post of July 16, 2011: difficulty delineating genre.).

Hyperion Research group has published an overview of the cottage industry and its current inhabitants (See my post of Feb. 23, 2011: strengths of Hyperion’s report; and Feb. 24, 2011: predicts entrance into the market of enterprise application vendors.). A recent report brought home that difficulty (See my post of March 6, 2011: Hyperion Research describes a dozen vendors of matter management systems.). Other posts on this blog have identified candidates in this domain (See my post of Feb. 15, 2009: LegalMaster site lists Legal Bill Review, LRI (Legal Review, Inc.), ELF, LAS (Law Audit Services), Visibility, Legalgard Litigation Advisor, ValidZone and Direct Invoice, BES, Direct Commerce, Petersen, and Stuart, Maue, Mitchell & James.).

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Earlier I fingered the chief culprit that preserves the status quo, the single most flagrant obstacle to improvement in law department operations: a refusal to stop and think about how work is done (See my post of July 11, 2011: pause and reflect.). If an internal lawyer does that, ten bedrock foundations are available to will improve operations.

  1. Push clients to clarify their requirements. Train clients how to request services and what they can do to help get the service (See my post of Feb. 11, 2007: survey data on web forms; March 26, 2007: pros and cons of Requests for Services; Nov. 8, 2009: pluses and minuses of requests for legal services; Nov. 10, 2010: contract intact systems; and Jan. 7, 2010: clients request legal services through an online portal.).

  2. Define and differentiate legal services. If work streams in as an undifferentiated blob, no law department can pick out what parts of it to treat differently.

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Amy Fox holds the title of Lead Knowledge Management Counsel in the Legal and Corporate Affairs department at Intel. We learn that because Fox will be speaking at an upcoming Ark conference, Knowledge Management in the Legal Profession on October 26-27 in New York City. Four observations result.

One: Fox is the only representative from a legal department among the many law firm and consultant speakers. The role is unusual.

Two: That Fox is Intel’s “Lead” knowledge management lawyer suggests there are others.

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From the standpoint of a law department, you could say the ultimate value-based arrangement obligates payment only when and if the law firm accomplishes just what the department wants. With inventions suitable for patent protection, what could be better for a law department than to pay the law firm only if it obtains the patent? This was the arrangement described, in so many words, by Amar Bhidé, The Venturesome Economy: how innovation sustains prosperity in a more connected world (Princeton Univ. 2008) at 85.

To be sure, the payment was almost certainly more than hours worked times rates charge, because the patent prosecution firm took on the entire risk of the patent being rejected. I suppose also that the firm had the right to decline to prosecute a patent.

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Bill Henderson, Director of the Center on the Global Legal Profession and a Professor of Law at Maurer School of Law, co-authored an article in the ABA J., July 2011 at 41. The authors credit three interconnected forces with testing and stressing the legal market. None of them fit from the law department side.

“1. More sophisticated clients armed with more information and greater power to rein in costs.” The collective managerial nous of general counsel in the United States has risen in the past decade, including because more information pertinent to management has become available and with lower access costs. Whether this translates into dramatic internal changes or buyers’ leverage, however, is unclear

“2. A globalized economy, which increases the complexity of legal work while exposing U.S. lawyers to greater competition.” The overall impact on lawyers in US companies of increased global trade is unclear. For some law departments, worldwide trade and laws dominate, but for most that is peripheral. Exports have accounted for only about 10-13 percent of gross domestic product in the past few years and less than that from the massive services sector. More competition from providers of legal services around the world, such as the giant UK law firms or LPOS, can only benefit law departments.

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“With some exceptions, any average of a large number of similar terms will have a normal, bell-shaped distribution.” This powerful statistical discovery by Pierre Laplace in 1810 as described by Sharon Bertsch McGrayne, The Theory That Would Not Die (Yale Univ. 2011) at 6, means that if a law department takes the average of successive invoices, for example, those averages will have a Gaussian distribution. In accordance with the central limit theory, if every month you take the average of new cases that month and the previous month, the series will distribute normally.

So what? You can use standard deviations and many other statistical tools when the collection of metrics takes the form of the well-understood bell curve (See my post of March 12, 2009: bell curves with 8 references.).

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The greater a company’s revenue, the less it spends on legal expenses in proportion to that revenue. Despite having amassed 15 possible explanations for that pattern, another one came recently to my attention (See my post of Aug. 21, 2008: client satisfaction or what leads to it, invention activity within the company, pay of in-house counsel, and the ethical stance of companies; and Dec. 3, 2007: 11 more reasons for economies of scale.). The source was Amar Bhidé, The Venturesome Economy: how innovation sustains prosperity in a more connected world (Princeton Univ. 2008) at 16.

The larger the department, the more its managers are likely to learn about an innovative management method; more importantly, the more they will have opportunities to match that new idea to some need. They have more needs, in the first place, than a smaller and simpler department. They can also stick with the innovation longer to rub off the rough edges. The larger department can absorb more trial and error and it has more talents and skills that can extract value from the new idea. In other words, more opportunities and more resources are at hand so the department is more likely than smaller departments – at smaller companies – to take advantage of the novelty and improve the benchmark metric.

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Three international giants now own matter management systems for law departments. Since ThomsonReuters has acquired Serengeti, the alpha males of the legal industry can duke it out. From a different standpoint, the field of major players in the legal industry who offer matter management software is fuller. Wolters Kluwer came first when it bought TyMetrix and added it to the CT group. Reed Elsevier, owner of LexisNexis and much else law-related, acquired CounselLink and Examen.

Since each of Thomson Reuters, Wolters Kluwer and Reed Elsevier roam the globe widely, we can confidently predict that their respective software packages will also spread internationally.
By contrast, so many of the competing vendors are private and comparatively puny (See my post of Feb. 15, 2011: estimate that 90% of U.S. legal service providers have less than $50 million revenue.).

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Let’s not be economic determinists when we think of law department management

A framework or model consists of a set of concepts, while a theory explains how, why, and when the concepts are related. A useful theory explains and predicts.

One framework to explain law departments and how they operate relies on economics. Input and output, costs of resources, return on investment and other analytic tools of economists have appeal as useful and explanatory.

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To this point I have located 33 books about law department management (See my post of Nov. 16, 2009: approximately 32 books about law departments with 8 references; and March 29, 2010: Trevor Faure’s The Smarter Legal Model.).

Two more have recently come to my attention. Leadership and Management Challenges of In-House Legal Counsel, the first book in Australia which is wholly dedicated to the in-house legal profession, is edited by Prof. Benny Tabalujan (LexisNexis Australia, 2008) contains 11 chapters from in-house counsel and consultants in Australia, New Zealand, Singapore and Hong Kong.

Courageous Counsel is the book that Michelle Coleman Mayes, the general counsel of Allstate, has co-authored with Kara Baysinger, a partner at SNR Denton. It is about the history of women GCs, according to InsideCounsel, May 2011 at 68, and is due for publication in September.