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Well-run legal departments should have goals that have cascaded from corporate headquarters. A mission statement announces some of the durable goals, others might vary from year to year. A practice in a law department is a means to achieve one or more of those goals. To illustrate, a goal is to manage outside counsel responsibly, practices in pursuit of it are legion. Or a transcendent goal might be to steward corporate funds well.

David Hume, the great empiricist philosopher believed that our wants and desires determine our ultimate goals, and the role of reason is limited to telling us how best to achieve those goals. Reason applies to means (practices), not ends (goals). Emotional and psychological needs fuel goals, whereas the thinking parts of our brains, ideally, choose the tactics and techniques to get their.

If corporate goals are set for law departments, if the trickle down from on high sets the objectives, then managers of law departments apply reason to select among the contending methods to achieve them.

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Your law department has used a firm satisfactorily for years, but nevertheless seeks bids from it and other law firms to handle certain matters. The incumbent firm comes back to you with all kinds of new ideas and potential concessions or advantages. How do you respond?

Some inside lawyers might bluster and snap back: “Why didn’t you propose these ideas before? For all these years were you ripping us off? Were you complacent and feeling entitled?”

Wiser heads empathize and understand that not many service providers volunteer to reduce their fees or profit and that competitive juices fire up the imagination. If they were honest with themselves, those wise heads might look in the mirror and ask “Why didn’t I think of these improvements and request the firm to oblige?” If you invite an incumbent to propose, appreciate and welcome that the firm has to offer something new.

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When the current general counsel of Mercedes-Benz (Charles Shady) took the wheel two years ago, the legal department ranked 29th out of 30 in an in-house survey, with just 68 percent of the group expressing job satisfaction. In 2010, the law group was the highest-rated department for employee satisfaction in the entire company, with 92 percent of its staffers reporting they are happy at work. Doesn’t this sound like an indictment of the former general counsel? I doubt pay or offices or work shot up in quality, so what else besides the management atmosphere could account for such soaring satisfaction?

This background comes from the New Jersey L.J, July 8, 2011 and can be found here.

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The other day I heard an argument new to me for an extended fixed-fee period. The period was three years. Three years seemed right to this general counsel because law firms could not afford to run at a loss (low-ball) for such an extended period. For one year, they might write off chunks of time to buy their way into a prestigious client; for three years, the pain would be too great. By the way the fee did not have to stay the same each year.

My concern would be that a three-year commitment probably brings with it a built-in premium just for the length of time. Like a 30-year mortgage rate topping a 15-year mortgage rate, there are more unknowns for the law firm so the fee proposed rises.

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A few days ago I ventured to list in order of respectability why legal departments don’t aggressively control costs of their law firms (See my post of July 21, 2011: 14 reasons.). I am gratified two readers added their thoughts.

John Conlon pointed out “that many of the corporate in-house attorneys come from the very firms they are supposed to be ‘regulating’ or come from big firms with the same billing models. Thus, they truly do not know any better.” I would add that it is hard to crack the whip on your former partners, be they former authority figures or colleagues.

Conlon added that “the very idea that legal bills could be reduced somehow is perceived as a challenge to an in-house counsel’s ability as a lawyer. It is as if someone says, ‘you have not been doing a good job as a lawyer.’” Again, I agree. If you give good instructions to a law firm and keep on top of their efforts, how often should you have to ask them to cough up time?

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A report a few years ago had data for a group of law departments about “the largest expense item incurred by” the participants. The median figure for that big ticket item was fairly consistently about eight percent of the total legal spending of the departments, whether you looked the participants as a group, by a revenue range, or by certain industries.

What came to mind was that somewhere near half of a department’s total legal spend comes from compensation, facilities, and internal charges that don’t vary much year from year. Therefore, the costly whopper is an external expenditure, typically stemming from a major deal or a large lawsuit.

Consider some implications if a single matter – the acquisition of a company or a class action – accounts for 16-20 percent of a typical law department’s external spend in a year. Right out of the box, you can guess that often the tsunami could not have been anticipated during the budget period months before. Then too, why play around with minnow expenses if one whale deserves the most attention. Third, if each year a budget-buster comes along, then in fact you can budget for it, even if you do not know anything about its specifics.

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Non-stop activity at work – meetings and conference calls end to end with no respite – wears people down. One reason proposed by sleep researchers is that “we oscillate every 90 minutes from higher to lower alertness.” An article in the New York Times, July 24, 2011 at BU8, likened the daylight rhythm to the 90-minute sleep cycles people pass through at night.

It’s as if our bodies ask us for a break approximately every 90 minutes. If we don’t, we rely on emergency sources of energy such as adrenalin, noradrenalin, and cortisol. “In this aroused fight-or-flight state, our prefrontal cortex, which helps us think reflectively and creatively, begins to shut down. We become more reactive, reflexive and impulsive.” Nothing that distinguishes a careful lawyer!

In-house lawyers, under stress and under water, need to recognize that a change of pace, a bit of relaxation, a nap even will help them be much more productive during the remainder of their cycles.

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It is difficult to corral with assurance which software offerings should be included as matter management systems. For example, should systems that primarily focus on electronic submission of bills be treated as matter management systems (See my post of Oct. 18, 2006: lists e-bill package providers.)?

Should we invite into the tent software designed to track information about patents, trademarks and other forms of intellectual property (See my post of Sept. 5, 2009: databases for intellectual property with 11 references.)?

Related software also includes third-party report writers (See my post of May 25, 2011: leading report writers.). Portals, which come in many flavors and with many definitions, complement matter management system software (See my post of Aug. 16, 2006: portal technology; Jan. 25, 2007: boards of directors and portal software; June 4, 2009: a patent portal; Jan. 7, 2010: clients request legal services through portal; Feb. 10, 2010: data warehouses; April 28, 2010 #1: Dell wins award for patent portal; July 7, 2010: policies placed on a portal; Sept. 9, 2010: IBM’s client-facing portals for legal aids; Nov. 27, 2010: platform compared to portal; and April 29, 2011: Lecorpio’s patent portal.).

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Logical positivism, a philosophical movement in the 1920’s and ‘30’s, held that a “proposition not reducible to a simple enunciation of fact can have no intelligible meaning.” The quote comes from Bruce Mazlish, The Riddle of History: the great speculators from Vico to Freud (Harper & Row 1966) at 204. The linguistic move in philosophy, which sometimes goes under the name of logical analysts or analytic philosophers, held that if words could not be clearly stated, defined, and subjected to measurement, then they degenerated into uselessness.

“Value,” “risk,” “quality” and “judgment” would have no intelligible meaning to a logical positivist. They convey something to all of us in an ordinary sense, but they fundamentally lack rigor and precision. If we only know it when we see it, to a logical positivist we do not know it and we can’t say anything credible about it (See my post of July 8, 2010: positivism’s perspectives on law department management.). We struggle to pin down these terms, and we always will.

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Although I don’t speak Portuguese, I hope I correctly translated a post on the LinkedIn site of FDJUR, hosted by Jose Nilton Cardoso. He asked the group’s members a question along these lines. “The structure of the law department in your company might include other functions. Of the following, where you can check more than one, which functions fall under the law department?” 35 respondents marked a total of 78 items from the multiple choice list (the Portuguese is in brackets).

Government Relations [Relações Governamentais/Institucionais] 13 (37%)

Government RFP bids [Licitações] 13 (37%)