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Performing under his nom-de-blog Rees Morrison, that ever-popular raconteur of ratios, the nation’s nimble narrator of numbers, regales the YouTube world with inimitable insights about indices and magical moments on metrics! This live, uncut performance, filmed al fresco, ad hoc, without makeup or script writers, and away from the klieg lights of the paparazzi, smuggles out a rare glimpse into the wild and wacky world of comprehensive total expenditures as a percentage of corporate revenue, at the median no less!

Mouse here, you millions, crank up the speakers, and settle back for a head-warming three minutes of vintage benchmark boisterousness!

You can relish it early, before Cannes, even well before Sundance, this feel-good, nano-documentary on derecho data. Law department benchmarks will never be the same!

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This enormous multinational, with revenue of $104 billion, operates globally in consumer electronics, mobile communications, home appliances, chemicals and more, according to strat.+bus, Summer 2011 at 44. Even so, “the corporate core limits its voice to brand-building, R&D expenditures, high-level human resources decisions, and capital investments.” Not a word at the top level about legal risks or litigation. Those concerns of lawyers, apparently, aren’t “core.”

LGE has plenty of lawyers in its many business units, but at the very top, other concerns are more important (See my post of July 15, 2010: efficiency moves of 5 lawyers at $6 billion US manufacturing arm; Aug. 22, 2010: contracts management at LGE US; and Aug. 25, 2010: more LGE legal practices.).

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Marc Firestone, the general counsel of Kraft Foods, told an audience at the SuperConference about his law department’s steps to define what his lawyers mean when they use non-quantified terms. Non-quantified terms – called “estimative language” by the National Security Agency – include “strong probability,” “poor chance,” “pretty good odds,” “likely” and other expressions that convey a probability but can have widely different interpretations between speaker and hearer.

First, the Department formalized a scale so that each variation appears on the scale. The Department reviewed this with their clients so that the range of likelihood was narrowed as much as possible. People mean the something similar when they use a phrase.

Second, the Department set itself the goal to try harder to find data to support any particular use of estimative language. With data, even partial data, it becomes easier to be more precise with words.

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The law department administrator from The Williams Companies, speaking at Mitratech’s Interact 2011 Conference, mentioned that her department of about 70 lawyers averages 1,500 matters a year. That ratio grabbed my attention since I have not seen a metric such as 20-30 matters per lawyer per year. Of course, that metric depends how a law department defines matters (See my post March 26, 2008: definition of “matters.”). Still, assuming Williams only creates matters for reasonably significant activities – reminds me of named hurricanes – at least that is the basis for a comparative benchmark. Even internally it could be revealing.

She went further. Of those 1,500 matters, about 500 have outside counsel. The ratio of one-third of all matters having some fees billed by external counsel offers another metric that is uncommon – but potentially very useful.

At the least, law departments can pay attention to both metrics and give some thought to their own patterns over the years. At some point, and perhaps even now, a benchmark study will suggest what ratios are most common.

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At the SuperConference yesterday, Carrie Hightman, the general counsel of NiSource, offered her thoughts on a panel about relations with the CEO, CFO and the Board of Directors. She stressed how important it is to have a “good working relationship” with each of them and offered four particular recommendations.

  1. Be very solicitous about the time of Directors. Get them their Board materials on time, for example, which may seem trivial but matters a great deal to some of them. The care and feeding of directors, done smoothly and consistently, will help you get along with them well.

  2. Understand your role during Board meetings: mostly as a passive participant. Judiciously choose when to comment and hone your skills as a facilitator who can take the temperature of the room, sense body language, and cut short rambling presentations that no longer interest the Directors.

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A verse from Matthew in the Gospels says “For unto every one that hath shall be given, and he shall have abundance.” Some people refer to the Matthew Effect where skills and ability beget wealth, and more wealth, such as well-favored law firms getting more and more high-value work. This teaching and term comes from Len Fisher, The Perfect Swarm: The science of complexity in everyday life (Basic Books 2009) at 121. In-house, a smart lawyer who works hard gets more opportunities, shines more, gets promoted, gains more recognition and the beneficent spiral continues.

A vendor whose package breaks away from the pack may continue to widen the gap as the Matthew Effect kicks in – more users, more R&D, better marketing, and the road to market dominance clears. In a fanciful moment I even applied the Matthew Effect to blogs, inasmuch as the better ones attract more readers, comments, sponsors, and attention. In our competitive world, the good often get better and pull away to dominate as the winner takes nearly all (See my post of April 26, 2006: Internal Labor Model depicts tournament; Nov. 13, 2007: network benefits can build to winner-take-all; March 16, 2008: lawyers in a top-dog competition; April 22, 2008: struggle for promotion will lead to cognitive enhancers; Nov. 19, 2008: jostling, in-house lawyers will spend freely; and Nov. 13, 2010: drugs that enhance cognitive ability will be used because of tournament mentality.).

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Our word ostracize comes from votes in Athens written on broken pieces of pottery called ostrakon. The politician named most often on the pottery pieces was barred from the city for ten years — ostracized. This shard of history and etymology comes from Len Fisher, The Perfect Swarm: The science of complexity in everyday life (Basic Books 2009) at 89.

What if a law department collected a number of its processes – steps that had to be taken for something to be done – and let members of the department vote on the least useful. Whether they vote with pottery pieces or anonymous submissions, that might be a way to prune accumulated encrustations of low value requirements. Banished be from fair Verona the process that has Romeo’d too far.

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An astute observer of the legal scene remarked during a recent presentation that “the best marketing tool of a law firm is its invoice.” What he views as enhancing a firm’s image is the value of being shown that a partner has written off time so that you see tangibly that the firm recognizes and strives for cost efficiency.

Plausible, as far as it goes, but a law department with sharper fangs might wish good management and staffing had obviated the need to lop off time in the first place. What about other bills where the partner was not so conscientious? What about self-discipline by the timekeepers in the first place? Defects discovered and fixed don’t make customers feel all that impressed.

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Law department managers complain about the level of ignorance their outside firms suffer from regarding knowledge of the company. They gripe, but what can they do to raise the level? At a recent conference, I heard about a telecomm law department that invites its key law firms to gather and hear from business executives (See my post of April 25, 2009: one part of the ACC value commitment is to learn a client’s business and strategy.). That is an excellent tactic, but there are many others.

Many of the tools available to in-house lawyers for them to learn about their company’s business also benefit outside counsel (See my post of May 3, 2006: knowledge of the business with 7 references; and May 7, 2006: in-house training on financial literacy.).

Put your firm’s lawyers on appropriate distribution lists regarding business developments, include them in clippings from RSS feeds, invite them to listen to analysts’ calls, go to lunch with them (without being charged), send them books on the industry or leading companies, distribute annual reports, and generally share what’s happening in the company.

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When researchers gather data for statistical analysis, there is always some slippage, by which I mean that the results would likely vary within a calculable range if the researchers duplicated the study. Statisticians refer to that variability of results as margin of error or sampling error. Here is a good description of that flux from a recent survey. “The margin of sampling error at the 95% level of confidence is ±4.6 for total lawyers (N=455) and ±9.8 for total students (N=100). This means that if we were to replicate the study, we would expect to get the same results (within 4.6 percentage points for lawyers and 9.8 percentage points for students) 95 times out of 100.” Thus, for example, if 30 percent of the lawyers said they were underpaid, only five percent of the time if a similar survey were conducted over and over would the result be lower than 25.4 percent or higher than 34.6 percent.

All statistical survey findings should explain their margin of error so that those who use the findings can determine their degree of reliability. Smaller samples for the most part have larger margins of error (See my post of Dec. 9, 2005: margin of error and sample size; Aug. 29, 2006: margin of error and subgroups; Aug. 30, 2006; sampling error; April 22, 2007: sampling error; Oct. 31, 2007: formula for margin of error and benchmarks; Feb. 7, 2008: margin of error of a group, yl√n = 4xl√16 = x; and Jan. 11, 2011: synthetic indices and margins of error.).