Law Department Management

Ten most interesting posts on this blog of May 2009

Some time having passed since I published 100 or so posts during May, I reread them all and chose the ten most provocative and interesting. For each, I wrote in brackets after the header a brief description of the post; you can click on the post title to read it in its entirety. If you have a comment or would like all the posts at once, please email me and I will be happy to send them to you in a Word file.

Auctions: pick the best bidder but for one dollar more than the second best bid (May 28, 2009) [A way to lessen the likelihood that the prevailing bid is too low for the winner to perform well. This method increases the chance that a fixed-fee arrangement will succeed for both sides.]
Four ways to look at concentration regarding a department’s use of law firms (May 29, 2009) [The pattern of a legal department’s use of law firms has several formulations. Commonly, concentration describes the number of firms retained, but there are other ways to convey different aspects, such as according to matters or only firms paid above a certain amount.]
Try a double blind evaluation of law firm proposals (May 29, 2009) [The bias of pre-formed impressions makes evaluations of proposals from firms quite problematic. Evaluators in the legal department like or dislike some firms even before they read the proposal. One way around such favoritism is to conceal the identity of the firms in large parts of their proposals.]
A possible benchmark metric: total lawyer hours worked per billion of revenue (May 22, 2009) [A company buys hours of attorney work from its inside employee lawyers and from its outside law firms. The total of those hours worked, when normalized per billion of revenue, gives general counsel another metric to benchmark against.]
A suggested revision to the estimate that in-house attorneys work 1,850 chargeable hours a year (May 21, 2009) [All kinds of metrics and management decisions depend on reasonable figures for how hard internal lawyers work. The standard benchmark for what are referred to as “chargeable hours” may be too high.]
Specialist lawyers see their legal domain in everything; the sniglet “experteyes” (May 10, 2009) [Among the tensions inherent in a general counsel hiring lawyers who specialize in a particular area of law is the spot-it-everywhere syndrome. To a specialist, nearly every fact pattern exposes a risk in the specialty area.]
The useful information you gain about your lawsuit if you negotiate an alternative fee arrangement (May 6, 2009) [If a law firm contemplates accepting lower fees now in return for the possibility of a results bonus later, that firm will size up your chances. How the firm, therefore, negotiates the bonus arrangement gives you insights into what they think the matter is likely to be worth.]
Does the monthly rate of expenditures on cases rise faster the longer the case lasts? (May 6, 2009) [Everyone expects legal fees to skyrocket just before and during trials. But some people think that as cases drag on the burn rate rises. Perhaps that is because cases that can be resolved are resolved, and the few that remain are difficult, presents higher risks and rewards, and more effort.]
A radical proposal – divert bill-review time to firm-direction time (May 3, 2009) [If those who review bills rarely write off much time or give feedback to their law firms, why bother? Spend that review time telling the firm what to do, how to do it, and when to do it and enjoy greater savings.]
Not what you hear: high satisfaction with their firms’ ability to understand clients’ business needs (May 3, 2009) [Loyalty to their key law firms has always been high among legal departments. If an in-house lawyer does not like a partner’s work, that lawyer stops using the firm. The effect over time of all this is that most in-house lawyers feel pretty good about the firms they individually use.]

Plotlines, a presentation technique more advanced than timelines

In-house counsel who need to present complicated material to clients or outside counsel should consider the advantages of a plotline. As a visualization tool, timelines leave much to be desired (See my post of Feb. 16, 2008: flowcharts and summaries.). “A plotline is more challenging to the audience. But, it is orders of magnitude more interesting. We were able to combine a flow chart, two line graphs, a pie graph, a bullet-point list and a traditional timeline into a single, coherent plotline - and we were still able to leave plenty of white space in our design.”

This quote comes from The Jury Expert, where the author explains in a post various aspects of a plotline. For instance, the title explains the meaning of the Plotline. As the least important elements, the time bar and the graph value lines are colorless and recede into the background. Informative material is color coded: “The purple group, the green group, the red group and the yellow group each have their meaning, and each are tied one to another to provide cause-effect links that follow logically in a common sense world.” There are summary statements (red, orange, green and black) which reiterate the story. Each entry is brief with little in the way of detail. Evidence supporting each entry should be explored in detail separately.

Automated tools are available to help lawyers and their administrative staff produce plotlines, such as TimeMap and TimelineXpress, by inData.

Mens sana in corpore sano: corporate lawyers and health

To be able to “run a good race” as an in-house lawyer over a period of years, it helps to stay healthy. An assortment of posts on this blog refer to physical health (See my post of Jan. 13, 2006 #2: health is crucial to a person’s overall happiness; Nov. 17, 2008: procrastination can harm health; Aug. 27, 2005: metrics on sick days; April 29, 2009: coming to work while sick; April 27, 2006: brain health is the number one indicator of longevity; Jan. 6, 2009: Spearman’s g correlates to health and lifespan; Jan. 8, 2008: health care and good looks; and March 26, 2008: physical appearance indicates physical fitness.).

An important part of a healthy lifestyle is, to put it finely, sweating (See my post of Feb. 25, 2008: exercise and the brain; April 16, 2007: corporate health centers; Nov. 6, 2007: energy; May 2, 2008: exercise improves the mind; Nov. 23, 2008: thermogenesis; and Jan. 30, 2009: even moderate energy sharpens one’s memory.). Among other benefits, exercise combats some of the debilitations of stress (See my post of June 11, 2008: stress with 18 references; and May 18, 2007: stress and pressure with 7 references.).

Healthy people get away from the stress and grind (See my post of Feb. 22, 2009: vacations and holidays with 10 references.). They also get enough shut-eye. An insufficient amount of restorative sleep should be a wakeup call (See my post of June 29, 2009: sleep and coffee with 10 references.).

À votre santé!

Third set of resources from blogs and websites – thanks to another 13

Many blogs and websites cite to Law Department Management Blog, 27 of which I have previously thanked (See my post of June 17, 2009: 14 blogs/websites that have directed readers here; and June 26, 2009: 13 more referral sources.). During the past two weeks, another thirteen saw fit to acknowledge this blog, so I return the favor. All of these 40 are resources for managers of legal teams in companies.

balkininfo.blogs.com/ (Ruth Balkin)

garrettworley.com/ (R. Garrett Worley III)

globalgeneralcounsel.wordpress.com/ (James C. Roberts III)

intellogist.com/ (Landon IP)

goinhouse.com/

lawdable.com/ (Counsel on Call)

Lawyerkm.wordpress.com (David Hobbie)

legalholds.typepad.com/ (John Jablonski)

legalmarketingblog.com/ (Tom Kane)

lexmonitor.com/ (LexBlog)

matadorlegal.com/ (Matador Legal)

morepartnerincome.net/ (Juris)

rtable.net/ (Prof. William Parke)

Ten benchmarks many general counsel wish they could obtain and ponder

Having presented the ten most fundamental benchmarks for legal department managers, all of them available from various sources, I mention here ten benchmarks that many general counsel may wish were more available (See my post of July 9, 2009: ten crucial metrics.).

Effective hourly rates of law firms that account for 75 percent or more of fees paid
Law firms paid more than $5,000 in a year per billion dollars of revenue
Settlements, fines and judgments paid as a percentage of revenue
Lawyers, who practice some law but are not part of the legal department, even by decentralized reporting – as a percentage of legal department lawyers
Paralegals by practice area
International legal spend as a percentage of total legal spend
Percentage of lawyers other than in largest location
Average years of lawyers with the law department as that number relates to lawyers per billion
Outside counsel managed per lawyer in the department who manages outside counsel
Chargeable hours actually worked

Another set of 12 practice pros and cons

Since my previous post on the advantages and disadvantages of fifteen practices (See my post of March 23, 2009: pluses and minuses of 15 practices.), I have accumulated a dozen more debate posts.

Break-outs or plenary sessions at large meetings (See my post of April 25, 2009: meetings and smaller sub-group meetings.).
Cross selling by law firms or let me find my own firms (See my post of April 2, 2009: marketing by external counsel to companies that are already clients.).
Fixed fee services vs. hourly billing (See my post of April 9, 2009: set prices for legal services.).
Formally evaluate outside counsel or let lawyers use and drop firms naturally (See my post of April 14, 2005: evaluations of outside counsel.).
Give inventors a share of patent revenues or shy away from that inducement (See my post of March 27, 2009: gainsharing with inventors.).
Hire lawyers to bring work inside or choose other techniques (See my post of July 4, 2009: substitute inside lawyers for external counsel.).
IT staff as employees or not (June 24, 2009: information technology support staff.).
Make clients fill out forms to obtain legal advice or just let them call (See my post March 26, 2007: pros and cons of client Requests for Services.).
Negotiate discounts or manage costs another way (See my post of March 20, 2009: six reasons for discounts.).
Assign responsible lawyers for chief firms or stay laissez-faire (See my post of July 8, 2009: pros and cons of relationship lawyers in-house.).
Specify the format for responses to RFPs or let firms decide the arrangement (See my post of April 2, 2009: should you tell law firms how to reply to a Request for Proposal.).
ADR techniques compared to litigation (See my post of Feb. 7, 2007: speed and involvement of executives.).
Use virtual deal rooms or rely on hard-copy repositories (See my post of Jan. 30, 2009: eight benefits of virtual deal rooms.).

Don’t ask for a single budget, ask for scenarios of plausible outcomes in a matter and the associated fee estimates

Jeanne Graham, writing in the Texas Lawyer, July 1, 2009, quotes the managing partner of Beirne Maynard & Parsons. His comments on decision trees are grounded in reality (See my post of June 17, 2009: decision tree software with 6 references.)

“The firm uses decision tree analysis when creating budgets for clients, basically looking at a series of 'what if' scenarios and their potential costs. For instance, the first scenario might be a settlement with a plaintiff, a second scenario would be the plaintiff bringing in a third party, a third scenario would be whether the case remains in state court or is moved to federal court, he says. The firm can estimate the likelihood of each scenario, and based on the firm's and client's experiences, can estimate what legal action and fees will be required to deal with each, Beirne says.”

Well said; better done. Ask your firm on a major matter to project two or three plausible ways the matter might reach resolution and their estimated fees for each way.

Ten most fundamental metrics for general counsel and interested observers

For US law departments that have more than five lawyers, here are the fundamental ten metrics:

They spend approximately 0.5% of their corporation’s revenue each year on their inside plus their external spend.
That benchmark for “total legal spending” does not include settlements, judgments and fines, which vary widely but are typically considerably less.
A legal department’s internal expenditures are typically about 40 percent of total legal spending.
On the order of 75 percent of the internal departmental budget is salaries, bonuses, and benefits overhead.
The next largest category of internal spend is (or should be) for facilities, at 5 percent or so.
About 60% of the total legal spend typically goes to law firms and other external service providers (approximately 90% to firms).
Of the external spend roughly a half is litigation-related.
Commonly, US legal departments have between three and seven lawyers per billion dollars of revenue, depending on the industry.
The fully-loaded cost of an internal lawyer ranges from $160 to $250 per hour.
To have one lawyer for every non-lawyer in a department is a normal ratio.

Recommendations of software for litigation tracking that are new to me

The head of litigation at a pharmaceutical company, facing scores of lawsuits, asked on a LinkedIn forum about software that would allow his firms to enter their litigation data. “I need several outside firms to input/upload confidential data [about lawsuits] securely.” Of the nine replies through yesterday, several mentioned less well-known software.

According to Jere Wilson, practice support manager at the law firm Shipman & Goodwin, “In the SaaS space is a really excellent litigation project management tool called iFramework.”

Also in the ASP space, Ray Jassin of Law Library Management “successfully implemented a reasonably priced litigation management tool for the legal department of a major corporation utilizing QuickBase, a hosted SaaS by INTUIT.”

Alan Robinson, a discovery consultant for LexisNexis Applied Discovery, wrote that “the most robust solution and best value for money is [Case Anywhere] - the best part of the service is the docket management capabilities.”

Paul Zengilowski added a comment “an interesting new application targeted at just the problem you're describing called LegalPM, released by a company called FifthRail.”

This information serves as an excellent illustration of the power of online professional networks.

Hyperpost on software applications for legal departments

Most of the metaposts on Law Department Management Blog look at specific categories of software, including the following seven:

Contract management (See my post of Nov. 22, 2008: contract management software with 11 references.).
Decision trees (See my post of June 17, 2009: decision tree software with 6 references.)
Document assembly (See my post of Feb. 26, 2008: document assembly with 16 references.).
Document management (See my post of Dec. 6, 2007: document management with 15 references.).
Idea visualization (See my post of May 15, 2009: idea relationship software with 6 references.).
Matter management (See my post of Aug. 5, 2008: matter management systems with 35 references.).
Portals (See my post of June 27, 2006: portals with 4 references; and Aug. 16, 2006: portals.)

Several metaposts focus on broader aspects of software usage in legal departments, including the entire genre (See my post of Feb. 9, 2008: law department software with 59 references.).

Then there are complementary topics, such as ASP or Software as a Service (SaaS), customized software, and support by internal IT staff (See my post of Feb. 25, 2009: Application Specific Programs with 6 references; June 3, 2009: bespoke, customized software written for legal departments with 12 references; and support by IT staff; and June 16, 2009: Information Technology staff group with 23 references.).

One collection is about a single application, Microsoft’s SharePoint (See my post of June 9, 2009: SharePoint with 6 references.).

Other metaposts I have not included in this hyperpost even though they depend heavily on software. My comments regarding those applications go not so much to the software qua software as to the management uses of it or consequences of use of the software. These related metaposts include dashboards, dictation, e-billing, email, e-discovery, extranets, intranets, LEDES, litigation support, social networks, Twitter, and wikis.