The Point

Over the weekend I heard a veteran of a Silicon Valley-based, Fortune 100 tech company say this:

“When I started, the legal department was 200 people … by the time I left it was 1500 people.”

This Matters

When its workload increases, the corporate law function has one primary, go-to move: add people to the team. But raising headcount does not create economies of scale.

When demands exceed budget, Legal’s standard response — “Bring more work in-house” — replaces high-cost specialists in law firms with lower-cost generalists on the corporate legal staff. But either way, it’s about adding people.

And that’s a big problem as the legal system’s demands on business continue to proliferate. Continue reading

The Point

Artificial intelligence-powered contract review systems allow automated analysis of thousands of contracts at a time, rendering unnecessary their manual review by attorneys.

Use of this technology yields major cost savings in attorneys’ fees, while producing more accurate results.

This Matters

Prior to purchasing a corporation or real estate, the purchaser and its bankers conduct “due diligence” of contracts to which the acquired corporation is a party, or of agreements connected with the real estate. They’re looking for terms that might pose risk, or terms that might be a source of value.

Traditionally, this has meant hiring lawyers to read each contract in search of those terms. Many lawyers. Many hours of reading. Many hours to pay for. Continue reading

The Point

I’m qualified to discern fat-vs-muscle in Legal spending from firsthand experience on both sides of the lawyer / client table. I’ve practiced business law for 25 years, and I ran divisions as a general manager and then served as an M&A executive for 12 years.

This Matters

To cut corporate law function spending — and to do it safely — a company needs both an attorney’s technical grasp of the legal system’s demands, and a businessperson’s cost control and management savvy. Continue reading

The Point

Corporate legal costs have risen steadily for the last 40 years (including 2020 — and excluding the Great Recession of 2008 to 2009). Meanwhile, the legal system’s demands on business increase relentlessly.

So, CFOs, or other business executives, need to step in and impose spending discipline on the corporate law function. Because lawyers in-house and in firms have not.

THE POINT

Reports about pricing “compromises” between law firms and client companies in the wake of Covid-19 simply reflect attorneys’ intransigence about hourly billing — not a real willingness to remove that business model’s waste and cost uncertainties by agreeing in advance the value they promise to deliver for a predictable dollar amount.

DISCUSSION

An example:

The American Lawyer / Law.com, January 4, 2021 (paywall): “Constrained by Crisis, Law Firms and Clients Are Learning to Compromise on Pricing“:

“The pandemic and its economic fallout have driven legal departments to turn to their law firms for help. With a toolbox of old and new ideas at their disposal, firms are showing that they’re willing to listen ….

“The circumstances are giving rise to conversations about pricing and driving both sides of the law firm-client relationship to seek common ground ….”

But “common ground” between lawyer and client is precisely what the hourly billing model makes impossible. Pricing risk remains Continue reading

In light of the response to my Wall Street Journal op-ed published June 3, “Will Lawyers Act with Honor After Covid? / My profession should support safe-harbor rules, not capitalize on uncertainty”, I will be hosting a free Covid-19 liability prevention web briefing to be held:

Monday, June 29 at 11:00AM Central Time, and

Tuesday, June 30 at 2:00PM Central Time.

This briefing is designed for executives, and describes how you can run your company’s operations to reduce Covid-19 negligence exposure. Although it takes into account court rulings, statutes, and regulations — this is not a law lecture.  It’s about how CEOs, CFOs and other P&L executives can manage reopening of their businesses in an unreasonable and dynamic risk environment.

Please let me know of your interest in attending by using the form at the “Contact Us” tab above, or email me directly at joel [at] webberpc.com.

Continue reading

THE POINT

As former general counsel and legal innovator Jeff Carr tweeted the day after the above headline:

“OMG!… Wait, didn’t this story run in 1998, and 2001 and 2008 and 2014 and, well every year there’s a survey? Oh well, might be a slow news day.”

DISCUSSION

This is old news. Really old news. Though I guess it doesn’t hurt to run a survey for current, empirical confirmation.

According to a corporate general counsel group called “In the House” and LegalBillReview.com, 73% of in-house counsel believe their legal department are spending too much on their outside counsel.

Chris Colvin, head of “In the House”, offered some context:

“He noted that the survey was sent to in-house counsel before the pandemic caused by the new coronavirus began. He said he expects the number of in-house counsel who think they are spending too much on outside counsel would increase if the survey were done today.”

Continue reading

THE POINT

This series is about how the legal system’s subjective and arbitrary character constrains your lawyer from answering “yes” or “no”.

Sometimes your lawyer doesn’t want to be pinned down to a definite answer, and you, as the business client, need to nudge him or her for some specificity.

DISCUSSION

In this fourth post I address the ultimate “human factor” in the law: All legal advice and representation comes to business owners and executives through attorneys.

You see, attorneys are people (fill in your own lawyer joke here).

On my first visit to Paris I found myself at dinner with Dr. H. — a family friend and Princeton PhD in physics — a senior official with the Paris-based Nuclear Energy Agency of the Organization for Economic Cooperation and Development (OECD). He peppered me — a newly minted lawyer with a New York firm — with questions about my work.

“You see, Dr. H., the legal system is riddled with subjectivity. It’s all about opinions — of judges, of regulators, of legislators, of disputing attorneys, of lay people acting as jurors.

“Unlike your discipline — there’s no empirical test by which to evaluate whether a judgment is valid or bogus. It’s nothing like nuclear physics, where a consistent scientific focus guaranties objectivity.”

[Cut me some slack here. I was 26. I had everything pretty much figured out, and saw everything in black and white. As I aged, I came to know less and less, until I became the dumb guy whom my kids will tell you they met upon their arrival in the world a few years later.]

Dr. H. (patiently) replied:

Continue reading

In light of the response to my Wall Street Journal op-ed published June 3, “Will Lawyers Act with Honor After Covid? / My profession should support safe-harbor rules, not capitalize on uncertainty”, I will be hosting a free Covid-19 liability prevention web briefing to be held:

Monday, June 29 at 11:00AM Central Time, and

Tuesday, June 30 at 2:00PM Central Time.

This briefing is designed for executives, and describes how you can run your company’s operations to reduce Covid-19 negligence exposure. Although it takes into account court rulings, statutes, and regulations — this is not a law lecture.  It’s about how CEOs, CFOs and other P&L executives can manage reopening of their businesses in an unreasonable and dynamic risk environment.

Please let me know of your interest in attending by using the form at the “Contact Us” tab above, or email me directly at joel [at] webberpc.com.

Continue reading

THE POINT
This series is about how the legal system’s subjective and arbitrary character constrains your lawyer from answering “yes” or “no”.
Sometimes a judge’s personal idiosyncrasies distinctive, well-informed judgments may drive the outcome more than an objective view of the law or evidence.

DISCUSSION

My own introduction to this came when I was a prosecutor in Manhattan. When my colleagues and I brought a felony case we — collectively — knew all of the personalities among the judges on the trial court to whom that case might be assigned.
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