Managing Your Lawyers

November 26, 2018

“Lawyers Can Make More Money from Vagueness and Unclear Instructions than Almost Anything Else” (Part 1 of 2)

So wrote English lawyer David Allen Green in the Financial Times the other day to conclude his op-ed on how to cut legal costs:

“The best way for a business to manage legal costs is to be clear about what it wants from lawyers and to force them to be clear about what they offer ….

“… Technology can only help so much. To manage costs directly needs a change in attitude as well as new hardware or software ….

“Legal technology is not primitive magic. It can have a beneficial effect on legal costs only if the will is there. Precision, plainness and purpose are more important ….”

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My goal for my readers and my clients is the same as Mr. Allen’s for his readers and clients: Clarity of thought on exactly what business owners and managers need from their lawyers — and specific guidance on how they can get it.

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This English commercial lawyer urges business people to get control over their legal costs by getting clarity of thought about what they actually need from their attorneys. To make this point he underscores what’s unclear to most business clients about their lawyers.

October 15, 2018

What Can Health Care Teach Business about Managing its Lawyers? Seeking Answers at the Mayo Clinic (Part 3 of 3)

by Joel A. Webber

Collaboration — on a consistent basis at least — calls for more than good intentions. Real teamwork is promoted — or it’s discouraged — by the way we pay people for their work.

In her “What Makes Minnesota’s Mayo Clinic Different?”, financial journalist Maggie Mahar interviewed one of its physicians, Dr. Marc Patterson:

“You may have heard that at Mayo, doctors collaborate. But did you know that after their first five years all physicians within a single department are paid the same salary?

” … ‘Most could earn substantially more in private fee-for-service practice’, he adds.

“’It doesn’t matter how much revenue you bring in,’ Patterson explains, ‘or how many procedures you do. We’re all salaried staff—paid equally. This is very good for collegiality and people working together,‘ he adds.

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Part 2 of this series described the Mayo Clinic’s teamwork approach to medicine. Mayo Clinic insiders describe this use of salaries rather than fee-for-service or other rewards for revenue generation as the foundation of teamwork medicine. Dr. Larry Jameson, executive vice-president of the University of Pennsylvania Health System, in a recent Knowledge@Wharton issue, stated that this use of salary to pay physicians removes, “potentially perverse incentives that are based on volume“.

October 12, 2018

What Can Health Care Teach Business about Managing its Lawyers? Seeking Answers at the Mayo Clinic (Part 2 of 3)

by Joel A. Webber

In Part 1 I described how the Mayo Clinic simultaneously achieved both the highest clinical standards and robust new efficiencies in its heart surgery department.

In looking to the Mayo Clinic for ideas on how to better manage the work that lawyers do for our businesses, I’d like to look in this Part 2 at one of that organization’s hallmarks:

Teamwork medicine rather than a star-performer focus.

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Warren Buffett has long used the word “moat” to describe a company’s competitive advantage. In his annual letter to Berkshire Hathaway shareholders for 2007, Warren Buffett cited teamwork medicine — as contrasted with individual superstar doctors — as the key to the Mayo Clinic’s appeal to patients:

” … If a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.”

October 10, 2018

What Can Health Care Teach Business about Managing its Lawyers? Seeking Answers at the Mayo Clinic (Part 1 of 3)

by Joel A. Webber

Last year the Wall Street Journal recounted how — eight years earlier — the Mayo Clinic’s heart surgeons had asked for two more operating rooms to meet skyrocketing demand.

“No” – replied the Mayo Clinic’s CEO — himself a physician.

Not only did he say “No” — CEO Dr. John Noseworthy then asked heart surgeons at what is probably the number one-rated hospital system in the world to redesign every aspect of their work.

For at least 20% in cost cuts.

Clinic-wide, Mayo has reported $900 million in savings over the past five years from such re-engineering projects.

And eight years after that request the Mayo Clinic’s heart surgeons got half of what they’d asked for — just one additional operating room.

Eight years later.

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Meanwhile, over in the business legal sector, aggregate spending never goes down (here and here).

September 21, 2018

I’m Back — Advising Business People on How to Take Charge of their Companies’ Legal Health

by Joel A. Webber

I’m back from a hiatus in my blogging after two months of traveling back East on family medical and elder care duties.

This blog, like my law practice, remains focused on a dilemma faced by business owners and executives:

How to manage legal and regulatory exposure where your attorneys (outside firms and in-house counsel alike) offer the specialized expertise in law that you need — but insert waste into their charges and staffing practices — and make little effort to prevent liability before it happens.

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I first really understood this problem only after I was invited by a corporate client to leave the practice of law to be general manager of a division.

Litigation and regulatory demands soar. A hostile legal climate requires the highest standards of legal analysis and representation — with harsh consequences if you get it wrong.

Meanwhile attorneys’ fees and in-house legal budgets refuse to go down (see here and here). Ten days ago I received this promotion from a legal budgeting consultancy:

“As you prepare next year’s [legal] budget, think beyond ‘last year plus five percent‘.”

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Such a low bar on cost control and management no longer surprises me.

Because I’ve worked on both sides of the lawyer / client table.

June 27, 2018

On Issues of Right vs. Wrong Business Owners and Executives Should Listen to Lawyers — But Think for Themselves

by Joel A. Webber

Some times a character test presents itself in the guise of a legal question.

And when that character test presents itself it’s the duty of general management — not their lawyers — to decide with wisdom and discernment.

Because — except where there is an actual violation of law or of the bar authority’s canons of ethics — lawyers considering moral issues can miss the forest (discernment) for the trees (strict, technical rule compliance).

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Consider this sequence relating to Tesla:

1. Two months ago California’s Division of Occupational Safety and Health opened an investigation into Tesla following a report about “underreporting recordable work-related injuries and illnesses”.

2. Two weeks ago Tesla announced that it would lay off nine percent of its work force.

3. Ten days ago (June 18) Bloomberg reported that — as a condition to receiving severance payments — Tesla would require a laid-off employee to sign the following statement of fact:

” [The laid-off employee] had the opportunity to raise any safety concerns, safety complaints, or whistleblower activities against the company, and that if any safety concerns, safety complaints, or whistleblower activities were raised during your employment, they were addressed to your satisfaction.”

Temple University law professor Brishen Rogers:

“I do think the agreement will chill valid employee complaints …. A reasonable worker would just keep their mouth shut, rather than risk losing their severance pay.”

Ya think?