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A presentation recently by Ralph Schroeder of Hyperion Research Group listed the ten most common key performance indicators (KPIs) and metrics used in intellectual asset management (IAM). Eight of them made complete sense to me, but two left me with questions.

“Number of own patents v. competition” was one of them while the other was “Patent usage (e.g., % patents in products, licensed, etc.)”. Regarding a company’s patent portfolio in comparison to the competition’s portfolio, that seems to be a crude measure rife with assumptions. Crude because sheer numbers of patents owned poorly indicates the quality, strength and centrality to one’s business. Assumption ridden because you have to pick your competitors appropriately and then the specific segments where your patents go head to head. The subjectivity and judgment is obvious.

The patent usage metric also raised questions for me. Your patents that bring in royalties or other benefits through license agreements can be pinned down precisely, but the percentage of your patents in products brings many more challenges. Even more difficult would be to attach revenue generated by particular patents.

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Just shy of 300 participating law departments, the GCM benchmark survey has collected responses from 114 of them regarding their matter management system. In declining order of mention, the providers of such software were Mitratech (19), Serengeti (12), LawTrac (8), CT Tymetrix (7), EAG (6), Bridgeway (4), Datacert (4) and LexisNexis (3).

At least 29 other packages were mentioned by one or more law departments, notably SharePoint (3), Pro-Link (3), and Tedesco and Smart Counsel (2 each) (See my post of March 12, 2011: early look at matter management systems based on 142 participants.). Nine law departments reported that they use a custom, internally-developed system.

The first-ever league table for this particular software niche, based on user data rather than vendor statements, will improve steadily as the GCM survey gathers hundreds of more participants. Take the survey (see the icon at upper right) and learn more!

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In Fortune, June 13, 2011 at 69, Roger Parloff plunges deep into the secretive world of third-party litigation financing. Mostly he drills down on the Chevron case in Ecuador and one major financer. What he finds is not pretty and it is certainly far from transparent. Along the way he mentions two hedge funds that invest in big-ticket lawsuits: Reservoir Capital of New York and Eton Park of London. Parloff also states that “England and Australia have embraced litigation financing even more enthusiastically than America has.”

Parloff makes much of two points: (1) “whether the funder should get actively involved in legal strategy,” and (2) whether lawyers and funders, as they deal with each other repeatedly, might respond to pressures that are not what the plaintiff cares about. At the end, he concludes that “The confidentiality-secrecy that currently envelops investments in litigation is what’s so intolerable. Deals behind closed doors, conflicts of interest, undisclosed influences – those are circumstances that will lead to regulation” (See my post of May 21, 2009: lawsuit financing by groups with 8 references; and April 11, 2011: hedge funds and investors in litigation with 9 references.).

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“A claim is said to be objective if its truth or falsity can be settled as a matter of fact independent of anybody’s attitudes, feelings or evaluations; it is subjective if it cannot. For example, the claim that Van Gogh died in France is epistemically objective. But the claim that Van Gogh was a better painter than Gaugin is, as they say, a matter of subjective opinion. It is epistemically subjective.”

John Searle wrote this in a book review in the NY Rev. of Books, June 9, 2011, at 50. The distinction applies to judgments of value delivered by law firms – note the telling word “judgments.” Too many consequences and interpretations and subjective views permeate any legal services for a value to be assigned to those services “as a matter of fact independent of anybody’s attitude.” The value of all legal services remains subjective and beyond conclusive (epistemically objective) proof.

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When I heard this statement from a keynote speaker, I felt the urge to stop, drop and role. I was fired up, smoke coming out of my ears!

The statement fails utterly to recognize the huge differences that can follow from a cost-plus operation by law firms where everything spent is house money (the corporate client’s) to a my-own-dime is on the line of a flat fee. Assuming the law firm believes the set fee is fair and assuming the firm understands that some fee arrangements bring profit and others loss, a flat fee could (and should) significantly alter many aspects of how they staff and work matters. A flat fee is a dramatic alternative to hourly billing and its effect should go far beyond that of a budget. That comment burned me up.

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In the Fall of 2010 ALM Legal Intelligence administered an online survey that 176 US in-house lawyers took. LexisNexis CounselLink published the findings. In them respondents indicated whether or not they were “Instituting a 360° review process for all law firms”.

I blinked 360 times. A full-circle review suggests that peer law firms evaluate other law firms and that something or someone subordinate to law firms evaluate them. My guess is that the survey question was really asking about “full evaluation” but chose a grander term. Even if nearly one out ten of the responding law departments (7%) do this, surely they do not pull it off for all of their law firms. That would impose a monumental task.

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A recent survey of 176 law departments found that at least half of them say they demonstrate value to their companies by “implementing knowledge management systems.” That finding troubles me, for three reasons.

Demonstrating value cannot mean listing all the things you do in your department. Not all activities create value. Second, unless the survey defines “knowledge management system,” the responses have little value. One respondent thinks that a shared drive meets it; another has Google Desktop to search; a third keeps hard-copies of briefs; and so on. It’s like asking, “Do you work hard,” and announcing that half or more of the respondents say they do.

Lastly, implementation is one thing; effective use where it should be used throughout the legal department is a completely different thing. To install software, to devise a process, to set up a Center of Excellence, or to implement a knowledge management system, does not lead to a self-executing success.

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From a presentation at the SuperConference, someone threw out the PIE theory of career success. They credit that theory with a quantification of what contributes to an upward career trajectory. I quote from the slide:

“‘P’ for performance: it accounts for 10% of success

‘I’ for image: 30% of success

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My usual comments about titles in legal departments culminate in something about Associate Counsel being senior or junior to Assistant Counsel. That pair of titles seems quite common, and usually in that order of ascendancy. But the title stepping-stones for the home office attorneys at Allstate sit quite differently.

From a presentation at the SuperConference, we learn that Allstate’s lawyers proceed from Staff Attorney to Attorney; then Senior Attorney; up to Corporate Counsel; and top out as Officer. Nary a mention of Associate General Counsel or Assistant General Counsel. Nor does it matter. It is important to some degree that lawyers and others outside the company appreciate, at least reasonably well, the level of someone from their title alone. Otherwise, a counsel by any other name would smell as sweet.

As an aside, I suppose to some a “Senior Attorney” sounds pretty influential, as compared to a mere “Corporate Counsel,” but that is mere speculation (See my post of June 26, 2008: titles with 15 references.).

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People bang on about why it is hard for a law firm to re-orient itself away from piling up billable hours, relying on old technology, not unbundling services handled better and cheaper by others, and so on in the litany of changes resisted.

Law departments, too, move very slowly. Only if the general counsel solidly and clearly and repeatedly goads a new attitude toward outside law firms is it likely the entire department will change its march. Individual lawyers, even those who head large groups like litigation or intellectual property, can only do so much to alter the traditional dance between firm and department.

A second reason why new practices have not transformed law departments is that most practitioners inside spend only a smallish part of their working hours supervising law firms. Aside from litigation managers, most of the attention of inside attorneys focuses on issues on their desk, not with outside law firms. The urgency for external change is muted.

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