Law Department Management Blog

Release 3.0 of the General Counsel Metrics benchmark survey of staffing and spending went out two weeks ago.  It covered 1,079 law departments in 28 industries.

You can get Release 3.0 if you take part before December 8th.

Here is the UR: https://novisurvey.net/n/GCMetrics2013.aspx There is no cost to complete the quick, confidential survey and get the  Releases.  Aside from some demographic questions like name, email and industry, the survey asks for six 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.

There is no reliable way to measure a patent’s value. But, according to an article in the Economist, January 5, 2013 at 52, “one can use a rough-and-ready yardstick: in how many places did the inventors seek a patent for the same technology?”

Somewhere the data is available to show that a given patent has been filed for and granted in a given number of countries.  On a parallel track, the more revenue a company gets internationally, the more widespread one would expect its patents to be, which might distort the value proxy.  In the United States, 27% of its inventors seek to patent their ideas abroad; in Europe, 40% do.  Each is a rough indicator of the other although patents may be a forward-looking indicator, since revenue follows.

Some companies routinely register new patents in tiers of countries.  To the degree that companies blanket patent like that, a metric based on value-indicated-by-number-of-countries offers less insight.

Regarding law departments, we often use the term “benchmark metrics” loosely.   Start with “metrics.”  They are something you can count that exists independently of the counting.  The square feet of a law department’s office space is a metric; the amount paid in overtime to secretaries is a metric; the number of law firms retained in Canada is a metric.  Before someone measured or counted, the feet, pay, and firms existed.

When you collect metrics over time for yourself or from several departments, and calculate the average or median or whatever of those metrics, you have created a benchmark metric.  It is a benchmark because you can compare yourself to the pattern of metrics.

By contrast, if someone asks law department respondents “Will you increase your office square feet next year?” you can calculate the percentage that reply “Yes” and “No” and “Don’t know” but that finding is not a benchmark metric by my definition.  Nothing existed until you asked the question, tallied the responses, and described the distribution of the responses.  Similarly, “Please rank the following methods for managing outside counsel costs” does not produce what I think of as a metric, let alone a benchmark.  It produces a tally which gives some insight but no comparison.

On June 10th General Counsel Metrics, LLC, sent Release 1.0 of its benchmarking staffing and spending survey to the 196 law departments that had submitted data through May 31^st.  The release covered companies in 26 industries and provides 25 benchmark metrics for revenue categories and numbers of lawyers as well as by country.  The next release will be in early August and will have well more than 350 participants.  I urge you to complete the straightforward, confidential survey today.  Click here and enter the basic six figures: https://novisurvey.net/n/GCMetrics2013.aspx

Release 2 will have a compilation of blog posts about graphics and plotting, and perhaps some early results on compensation metrics and matter management software.

If you would like to see what the releases look like, please write me: rees@reesmorrison.com and let me know your interest.

My article published in the National Law Journal on April 8, 2013 discusses three innovative forms of graphics.  Mosaic plots, box plots, and heat maps can represent all kinds of data that law department managers care about.  It offers some examples of each kind of graphic after explaining what they look like.  If you would like to learn more about these techniques, please click here for the article.  13-04-08 grahics of mosaic box and heat NLJ Rees Morrison.

In general, the law department industry has only just begun to figure out what data it can efficiently generate;, how to represent that data graphically, in tables or in other forms; and what analyses are made possible by that combination.

If you appreciate graphical presentations of data, take the GC Metrics 2013 benchmark survey.  Here is the UR: https://novisurvey.net/n/GCMetrics2013.aspx T here is no cost to complete the quick, confidential survey and get the five Releases.  Aside from some demographic questions like name, email and industry, the survey asks for six 2012 figures: number of lawyers, paralegals, and other staff; inside and external legal spend; and revenue.

This leader to an article caught my eye: “In markets with little regulation, litigation soars.  As regulation rises, litigation falls. Unless consumers are bound by so-called tort reform, their only recourse when harmed by an unregulated product is to sue its maker.” The quotation comes from Life Science Leader, December 2012 at 44.

Those who speak and write about law departments chronically bemoan the regulatory load faced by companies.  But when rules are laid down by government agencies, at least safe harbors and legislatively-sanctioned behaviors shelter companies from lawsuits in those areas.  In an unregulated market, the free-for-all companies might have fewer forms to complete but many more briefs to file.

Of course, everyone can think of exceptions and regulations can fan the fires of litigation, but the overall point bears on benchmark metrics and differences between industries.

One of the predictions in the Economist, the World in 2013 at 25, is that conglomerates will become more common.  As banks and venture capitalists become more risk averse, the article argues, companies will invest their own cash in a wider array of enterprises or endeavors. Another reason is that companies in emerging markets have sprawled into all kinds of activities and are now competing globally. Third, conglomerates will return to favor because consumers like integrated offerings from companies they recognize and trust.

If indeed significantly more companies consist of somewhat unrelated business activities (my rough definition of a corporate conglomerate), it makes it more difficult for their law departments to benchmark themselves.  There simply are not many General Electric’s and 3M’s around so that they can find similarly-structured, multi-line peers.

Consultants who advise law departments of conglomerates may have to combine findings from several industries and create a proxy benchmark or they may have to conduct what I call “sector” benchmark studies.  Sector benchmarking is harder to do because participants have to untangled costs and headcount shared by each sector and define their sectors somewhat comparably.