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The Point

1. By long-established tradition, and (nearly) invariable current practice, only licensed attorneys serve as the CEO of a law firm or lead a corporate law department. 

2. As a business lawyer who accepted a corporate client’s offer to run one of its divisions as a general manager 10 years into my legal career, I was largely blind to basic management principles until I became answerable to the P&L.

3. Leading law practice management authority Jae Um recently offered this advice to a class taught by University of Indiana Law Professor Bill Henderson, on how the largest category of major corporate law firms should approach strategy:

First, professionalize your management. Second, optimize your operating model — because you need to produce quality and consistency at scale and pace. By the way, you need to do it in that order.” Continue reading

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The Point

1. High-stakes corporate legal services call for optimum performance from the attorneys who provide them.

2. But long hours to the point of fatigue are the default mode for both in-house and law firm attorneys. (Stresses on in-house lawyers are such that a 2022 Wolters Kluwer survey finds 70% of them are “very to somewhat likely to leave their current position in the next year”. Bloomberg Law reports this week that law firm attorneys bill an average of 2,052 hours per year.)

3. Planned over-work for those who shoulder such consequential legal duties is unwise. Continue reading

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The Point

1. After two years of white-hot demand for their services, Bloomberg Law’s recent headline says demand for the junior lawyers who work as employees of big law firms (“associates”) is taking a sharp downward turn.

2. Even without the Pandemic’s boom / bust impacts on the legal market, the vast majority of such associates end up as short-termers who spend about six or fewer years at firms that nevertheless charge hundreds per hour for their work.

3. Those law firms lack an incentive to invest robustly in the average associate’s professional development, because most associates won’t become partners.

4. So the hundreds per hour charged for such associates’ time pays for the services of young attorneys who too often have been given only ad hoc preparation — who are “supervised” by one, two, or even three levels of attorneys senior to them — with consequent wasteful duplication. Continue reading

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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.”

Continue reading

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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

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The Point

1. A good business strategy: Accelerate revenue by making the order-to-cash cycle as short as prudently possible.

2. Tactically:

(1) Have lawyers draft pre-approved risk protection terms for sales contract templates before any discussions with customer,

(2) Agree in advance on the terms of all other standard risk protocols among lawyers, business unit management, and all other relevant corporate functions — again, before any discussions with the customer have taken place.

(3) Give your business unit head the authority to sign (i.e., no additional legal or other review required) if either (a) all prescribed terms of risk protocols have been met, or (b) he / she has approved any deviations from standard risk protocols that are within his / her authority to waive. Only if proposed deviations go outside those allowed by standard risk protocols should your lawyers be brought in as a condition for approval / disapproval.

3. Too many lawyers favor meddling as a matter of course — via last-minute contract mark-ups made while “running it by Legal” in mother-may-I fashion — rather than delegating their approval via protocols that sales people can implement themselves.

4. Protect your order-to-cash strategy by having your attorneys do their job in advance to the extent possible — to avoid such meddling and consequent choke points. Continue reading

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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

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The Point

1. Corporate Legal has a lot more work to do than budget to do it with.

2. In-house and in law firms, corporate Legal persists in its decades-long emphasis on custom work, done manually by one or more attorneys, in response to a one-off request.

3. Corporate Legal avoids adoption of process-based systems and related technologies needed to increase its capabilities at scale.

4. Absent an unlimited budget, Legal’s current practice of assigning more lawyers from law firms or in-house, as demands on corporate Legal increase, is not sustainable.

5. C-suite executives and business owners need to stop exempting corporate Legal from common sense standards that every other function has to meet, and start holding it accountable to core management disciplines. Continue reading

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The Point

The default mode for law firms consists of custom-made work, done manually by one or more attorneys, in response to a one-off request. That’s been true for decades — and it remains true as law firms deploy recent law graduates at hundreds per hour to do low-level grunt work in aid of more highly compensated law partners.

Meanwhile, given intense legal and regulatory demands, corporate law functions struggle to bridge the gap between the resources they have and the ones they need. Absent an unlimited Legal budget, simply assigning more lawyers is not sustainable.

Rachael Pikulski of Bloomberg Law reported in July that, despite the break-through solution they present to corporate law departments,  alternative legal services providers (ALSPs) are “being used for a relatively small proportion of an organization’s workflow, despite the specialized services and cost-saving potential ALSPs offer.” Continue reading

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The Point

Attorneys view contracts primarily through the lens of risk management. And only in a very specific context: Protecting the business in case of litigation. There is, of course, some merit to this focus. But only a tiny percentage of contracts actually end up in court.

The contracting process has implications for the business well beyond producing legal artifacts. For instance, such agreements help — or hurt — your company’s liquidity by driving the timing of payments into and out of the enterprise. Yet neither in my Ivy League law school’s contracts classes, nor in drafting agreement terms at the Wall Street law firm where I practiced afterward, did I ever read or hear the words “order-to-cash cycle”.

That’s why executives and frontline employees across multiple functions should take the lead in the contracting process. Being sure to access lawyers’ advice where needed. But with people from sales, finance, and operations managing the lion’s share of what should be considered, primarily, a business function. Continue reading

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