Managing Your Lawyers

January 6, 2023

Scaling the Capacity of Your Corporate Legal Function Requires Multiple Disciplines — Not Just More Lawyers

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The Point

“Corporate Legal”. For decades this phrase has referred to people who have been formally trained and experienced in only one discipline: law. And these people have had just one function: advice and representation on how statutes and regulations — and the courts and government agencies that apply them — could constrain a company’s actions and assets.

Under this traditional view, greater demands on the company from the legal system simply call for … more attorneys. This is how most attorneys in-house and in law firms still view law function capacity.

But Legal can’t keep pace with the legal system’s skyrocketing demands without scaling that capacity. And such scaling demands skills beyond those acquired in Juris Doctor programs and preparing for bar exams.

December 8, 2022

‘Tis the Season for Law Firm Rate Increases: Respond Emotionally? Tactically? Or Strategically?

by Joel A. Webber

The Point

From a November 28 report in American Lawyer Media / Law.com (subscription required):

“‘Surprised, Angry, Dismayed’: Legal Departments Vow to Fight Law Firms’ Rate-Hike Plans … The in-house legal community is expressing outrage that law firms will be pressing for aggressive rate hikes in 2023, even though they know that legal departments are under extraordinary pressure as the economic outlook sours”.

C-Suites and business owners concerned about their Legal functions have three options here:

1. The emotional option: Whine about frustrations,

2. The tactical option: Make do the best they can without challenging law firms’ status quo for hiring specialist attorneys, and

3. The strategic option: Take charge, using the same management disciplines by which other corporate functions and business units achieve operational effectiveness. Continue reading

November 10, 2022

Law Departments Lack Metrics on Quality of Legal Outcomes, So They Manage Neither Quality Nor Costs Very Well

by Joel A. Webber

The Point

1. If you don’t know the quality of what you’ve bought, no amount or kind of cost data can tell you if it’s money well spent.

2. The Thomson Reuters’ 2022 Legal Department Operations Index reported that 70% of corporate legal departments track total spending by law firm, and that other cost-control categories comprised 13 of the top 16 data sets on which they focused management attention.

3. But a mere 8% reported quality of legal outcomes among their top 3 focus areas, prompting one legal tech provider to observe: “Only 8% of Legal Teams Care About Quality. Really?”

4. Karen Skinner, of Gimbal Canada, one of the top half dozen law practice management experts in North America, had a different view:

“In-house teams not interested in quality of legal outcomes? It’s more likely they have no easy way to measure quality.”

October 28, 2022

Corporate Legal’s Latest Approach to Cost Containment: Same Old / Same Old

by Joel A. Webber

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The Point

1. For decades, corporate Legal has offered two responses to spiraling costs:

(1) “Bring more work in-house” — substitute less expensive, generalist lawyers as full-time employees to whom you pay salary & benefits, for more expensive, specialist law firm attorneys who you pay by the hour, and

(2) Slow-walk adoption of technology-enabled systems to do routine and recurring legal work cheaper, quicker, and more accurately — and instead double-down on use of lawyers to do such work manually.

2. Corporate Legal’s latest response to spiraling costs (as reported this past Monday, October 24, 2022, by the Association of Corporate Counsel, the leading global organization of in-house lawyers, in their State of Corporate Litigation Today Survey Report for 2022):

(1) “Bring more work in-house” — this was the leading cost containment method cited this past Monday, coming in at nearly 60% in the survey, and

(2) Slow-walk adoption of technology-enabled systems — this was reported dead last this past Monday among cost containment methods, with technology coming in at a mere 12%. Continue reading

October 20, 2022

Attorneys Are Good at Law, But Bad at Efficiency: So Have a Proven Manager — Not General Counsel — Run Legal’s Budget, Personnel & Operations

by Joel A. Webber

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The Point

1. The corporate law function costs too much and takes too long.

2. Most corporate law functions knowingly accept material amounts of waste in two major forms:

(1) Rather than fixed fees agreed between lawyer and client in advance of the work, most pay outside lawyers by the hour, and

(2) Rather than engaging alternative legal services providers (ALSPs) to implement process-based, technology-enabled systems to do routine and recurring legal work cheaper, quicker, and more accurately, they largely avoid ALSPs, and use lawyers in firms or in-house for such work instead.

3. Most general counsel’s backgrounds are confined to the practiced of law; they lack “management” experience as that term is understood elsewhere in the business.

4. It makes no more sense to insist that only lawyers can run the budgets, people, and operations of the corporate law function, than it does to say that only a physician is qualified to serve as CEO of a hospital system. Continue reading

March 18, 2019

Defining the Value of Lawyers’ Work: Where to Get Reliable Numbers for Sound Management Choices (Part 3 of 3)

by Joel A. Webber

A final installment in this three-part post.

What’s a practical basis for placing a value on attorneys’ work for the business?

In Part 1 I addressed the legal profession’s prevailing measure of lawyers’ work:

How long did the attorney decide to take doing the job?

Cost-plus. Bill the client company by the hour.

In Part 2 I addressed “data-driven” methods (with at least one present-tense exception that I’ve found, put this under the heading of maybe-in-the-future).

…

Here in Part 3 I address:

A price agreed in advance — between lawyer and client.

An example:

…

Barlit Beck, LLP

From Fred Bartlit’s April 5, 2010 Orr Distinguished Lecture at the University of Tennessee Law School:

In the early 1980’s Chicago trial lawyer Fred Bartlit was head of litigation at one of Chicago’s finest firms. He’d brought in a client whose big case was keeping 8 partners and 30 associates busy for months. “My partners loved me”, he said.

But Bartlit felt that this firm could deliver more effective legal representation to its clients for less money.

March 15, 2019

Defining the Value of Lawyers’ Work: Where to Get Reliable Numbers for Sound Management Choices (Part 2 of 3)

by Joel A. Webber

In Part 1 I addressed the need for reliable numbers relating to the value of legal services.

If what gets measured gets managed — and if measuring the wrong thing is worse than measuring nothing at all — then client company executives need a reliable measure of the value of legal services in their budget.

Toting up hours billed gives “certainty” about the method by which attorneys came up with the price that they charge to a client company.

But that total tells us nothing about the actual benefit received by the business.

Hence our consideration of two alternatives: “Data-driven”, and a price agreed in advance.

…

“Data-driven” calculation of the value of lawyers’ work for client companies.

I refer to “data-driven” in quotes because there’s (a lot) less here than meets the eye when you read legal profession headlines.

In fact, I’ve found just a single instance of data-gathering and analysis as the basis of determining the value of what attorneys do for a company. If I’ve missed something, I invite comment and correction on this point.

March 13, 2019

Defining the Value of Lawyers’ Work: Where to Get Reliable Numbers for Sound Management Choices (Part 1 of 3)

by Joel A. Webber

“What gets measured gets managed.”

February 15, 2019

Make Your Company’s Law Firms Compete on Terms of Service (Part 2 of 2)

by Joel A. Webber

In Part 1 of this two-part post I wrote that the conventional business law firm does not compete on the terms of service — does not adhere to management disciplines — that best serve client companies:

Know what the price will be before you agree to pay it.
Don’t accept assignment of two lawyers to do the work of one.
Every lawyer your company pays should be fully qualified to do the work you pay them for; don’t pay apprentice-type junior lawyers for their on-the-job training.
Avoid labor-intensive use of lawyers on routine tasks. Automate what can be done by artificial intelligence and other tech-enabled solutions;

And low rates were not among the terms of service I emphasized:

“Picking the ‘low cost provider’ when choosing your company’s lawyers is dumb.”

…

What’s a good first step towards these better terms of service — towards your lawyers adhering to the same management disciplines you require of every other function in the business — other than legal?

Get your company the terms of service — insist on basic management disciplines — in increments. Start somewhere.

Let’s say that federal income tax is a problem area for your company:

You can look for a boutique law firm that’s focuses on tax;
You can check out an accounting firm for the tax advice you need; or
You can seek out an individual lawyer who practices within a conventional law firm — but retain solely that lawyer — avoid the “cast of thousands” that conventional firms try to add on.

February 13, 2019

Make Your Company’s Law Firms Compete on Terms of Service (Part 1 of 2)

by Joel A. Webber

Competition creates the value that the customer gets. There’s no substitute for it.

Take a look at this morning’s Wall Street Journal (subscription required):

“Charles Schwab, Fidelity Escalate Brokerage Price War”.

Featuring a picture’s-worth-a-thousand-words chart showing Schwab’s average commission per trade going from $12 in 2015 down to a little more than $7 — along with similar moves over the same time frame by TD Ameritrade and E*Trade.

Here’s the kicker:

“Schwab kicked off the latest round of price cuts with an announcement Tuesday morning that it would double the number of ETFs [exchange-traded funds] that can be bought and sold at no cost on its platform. Fidelity followed within the hour saying its platform would likewise expand its commission-free lineup to include more than 500 ETFs.”

“Fidelity followed within the hour.”

…

Not so the marketplace for lawyers’ services to companies.

I am not saying that you should pick lawyers based on price. Picking the “low cost provider” when choosing your company’s lawyers is dumb.

What I am saying:

A company should be able to expect that its outside lawyers will compete based on non-price terms of service that meet basic management disciplines that owners and managers require in every other part of the business — other than legal.