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A major US insurance company headquartered in Boston has nearly 700 lawyers in 63 field legal offices. Of them, about 120 use WinScribe’s OnDemand “cloud based” digital dictation workflow technology. One out of five is impressive penetration of the productivity tool. I have not seen any other data on even a single law department and the penetration of dictation capabilities (See my post of April 8, 2008: dictating while commuting; May 27, 2008: post-mortem nuggets of learning; Feb. 4, 2009: seven vendors of dictation software or equipment at LegalTech: April 20, 2009: productivity of dictation compared to typing; and Feb. 23, 2008: dictation with 5 references).

This actual example of how many lawyers use a productivity tool – digitized dictation followed by manual transcription – stands out from all the marketing publicity that never gives specifics. The volume of use is impressive in absolute numbers but much more modest when put in terms of documents dictated per week (between 1 and 3). Still, other law departments have a role model for this tool.

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CEO’s know that “A great CFO is his best secret weapon.” Aside from the sexism, that’s a shot at CLOs. Or maybe GCs are not so secret? The article in Fortune, July 25, 2011 at 27, rubs in the comparison: “A great CFO needs to be part numbers whiz, part general manager, and part consiglieri.” Consiglieri? Isn’t that the forte of the general counsel, the wisdom behind the throne.

What threw me further was the rave about the CFO of Mittal Steel who “fought off a poison pill and a Russian rival in the hostile $38 billion takeover of European rival Arcelor.” Smacks of unauthorized practice of law, not that there were any M&A issues a good bean counter couldn’t handily take care of. Who needs a lawyer when you have a CFO?

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An article’s author writes that “Whereas there were about 3,000 multinational corporations in 1914, the figure rose to 63,000 in the year 2000.” If that latter figure is correct, and the J-shaped growth curve has continued for whatever they mean by “multinational corporations,” one could imagine 70,000 now, a decade later. The quote comes from Historically Speaking, June 2011 at 32, refers to Globalinc: An Atlas of the Multinational Corporation, published in 2003.

If a company has prospered to the point where it operates, or at least sells, in multiple countries, it probably has at least one in-house lawyer (See my post of Oct. 14, 2010: cites to 70,000 “transnational” companies but no source.). That 70,000 figure would not include “national” companies that have an internal legal function.

From various sources I have estimated, very roughly, 30,000 legal departments in the United States and Canada, 10,000 or more in Europe; and I would not be surprised to find 10-20,000 in Asia; 5,000 in Latin and Central America; and thousands more for the rest of the world (EMEA) (See my post of Dec. 31, 2010: estimates of total number of worldwide law departments with 9 references from 2010.). The total worldwide could easily exceed 100,000 law departments.

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If a law department participates in a project to collect and organize the contracts of a company, one of the headaches can be to translate historical contracts into a similar format. Legacy contract conversion presents a challenge for a law department to the degree people had stored contracts and forms in different places, saved executed contracts in different formats, kept different pieces of metadata about them, and allowed different practices regarding retention of contracts.

It is well appreciated, and often rued, that conversion of matter information from one database to another can be a costly nightmare (See my post of April 7, 2006: the full cost of a new matter management system should include conversion of data.). Consulting teams love the detail and depth; clients abhor the delays and dollars.

A similar struggle can take place, apparently, when a new contract administration system comes on the scene. This much I gleaned from a brochure of UpSideContract. If you want to sweep the tangled past into your new contracts database, you might have to slog through months of knotty contract conversion.

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Legal Strategy Rev. of CPA Global published an interview of Helen Gillcrist, Vice President and Manager of Enterprise Legal Services at Liberty Mutual. According to the June 27th piece, Gillcrest manages the insurance company’s relationships with several thousand law firms. Pay attention to four thrusts mentioned in the article.

http://www.cpaglobal.com/newlegalreview/4903/mutual_objectives_seal_lawyer_

Her team includes an “analytical group, including statisticians, econometrists – this company is very analytical and into metrics.” Mirabile dictu! Metrics are honey to this Pooh blogger.

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Charles Darwin scrupulously tried to address the criticisms he recognized would follow the publication of his revelations on evolution. He bent over backwards to honor all attacks he could anticipate. That style, once called the “habit of sympathetic summary,” philosophers now refer to as the “principle of charity.”

Summarize a counterargument to your own point in its strongest form, according to Adam Gopnik, Angels and Ages: A short book about Darwin, Lincoln and modern life (Knopf 2009) at 104. As he writes, so should bloggers follow: “The principle of charity is to make the other guy’s argument look good (therefore making yours look even better).”

Posts on this blog run on the short side, which makes them easier to organize, write, and read. That said, brevity makes it harder to acknowledge and charitably address opposing points. I will make more of an effort to think of and comment on contrary views, or at least state them in full and credible form. All too little of such deliberate and mature debate takes place in the field of legal department operations.

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As I watch last year’s participants in the General Counsel Metrics benchmark survey return to the fold this year, I have wondered why some do not. Several possible explanations have occurred to me. These reasons, other than the first one about cost, apply generally to my efforts as well as to the Hildebrandt law department benchmark survey, the ACC-Empsight survey, and the ALM benchmark survey (purchased a few years ago from Altman Weil).

Budget cuts preclude participation. If a law department doesn’t want to spare $600 to $2,000, that’s it.

Participants might not have found the survey report useful to them. The most likely reason, I think, is that the industry they are in was not adequately represented.

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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 write that “over the last 25 years government data shows legal services constitute a slightly larger proportion of the nation’s GDP – now nearly 2 percent – with no hint of decline.” Let’s assume that “legal services” means work done by law firms, that our gross domestic product in 2009 was $14.5 trillion, and that “nearly 2 percent” is 1.9%. That calculation says $280 billion paid for “legal services.”

There are something like 75,000 in-house lawyers in the United States (excluding government lawyers) who each spend on average roughly $600,000 a year on outside counsel (See my post of May 4, 2009: outside counsel spend per lawyer, about $600,000.). The General Counsel Metrics benchmark study for 2010 had data from 370 US law departments and found that median figure to be $511,000 per lawyer (but it includes some government departments). On those rough estimates, corporations in the US paid about $45 billion to law firms. (Yes, non-US companies pay for services of US law firms, but I don’t know how much.)

If the legal services market was on the order of $280 billion and corporations accounted for $45 billion, something seems off. Consumer spending makes up two-thirds of the GDP, but surely companies pay more than one-third of total legal fees. Part of the answer might be that “legal services” includes employed legal staff and perhaps the court system as well as fines, judgments and awards.

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Several of the functions that are “on the bubble” for law departments or are more typically handled outside the department have significant process elements. With contract administration, to take one, the legal counsel is a smallish part, but tracking, database entry, distribution, and calendaring are repetitive tasks. Likewise for compliance, where the auditing, training and checking are heavily process oriented. Or with both import-export compliance and anti-counterfeiting or anti-piracy, some legal issues arise but mostly the work involves day-to-day monitoring, paperwork, coordination with non-lawyers and other process steps.

Lawyers give counsel; others should handle processes.

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On June 27, 2011, Legal Strategy Rev. of CPA Global published an interview of Helen Gillcrist, Vice President and Manager of Enterprise Legal Services at Liberty Mutual. Gillcrist joined Liberty Mutual in 1981 and soon took a senior role in the law department, becoming perhaps the first law department administrator. Today, Liberty Mutual’s legal department employs more than 700 lawyers spread over 65 offices.

http://www.cpaglobal.com/newlegalreview/4903/mutual_objectives_seal_lawyer_

Actually, that is but a part of the insurance company’s legal entourage. “Our panel is slightly fewer than 1,000 law firms strong, but we deal with about 3,000 to 4,000 law firms because many of our customers specify that they want to use a particular firm.” Six years ago Gillcrist became responsible for the department’s policy and strategy for all these legal expenditures – managing its outside-counsel spend. According to the interview, members of her group “find the firms, negotiate the rates, audit the work and deal with any performance issues.”

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