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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.

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The Point

Past actual outcomes should determine who your company chooses as litigation counsel. Jeff Carr breaks it down this way:

“Effectiveness — was customer objective not met, met, or exceeded?

“Efficiency — was actual below or above agreed budget?

“Experience — Customer’s [satisfaction] with team?”

The legal profession — both in-house and in law firms — tends to skip the nuts-and-bolts due diligence required to understand such effectiveness, efficiency, and customer experience. It defaults instead to a loose proxy for these specifics: law firm reputation. Continue reading

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The Point

As both lawyer and executive I’ve seen multiple variations of this scenario: A friend heading an industry lending group at a money center bank calls me. Agitated. He and his counterpart at the potential client company have agreed on all business points for a large loan. But one lawyer’s insistence on their pet wording of some clause threatens to kill the deal, or at least add unnecessary time and work before closure.

Though occasionally legal counsel’s preferred wording may be sound, too often it just reflects one lawyer’s stylistic preferences over another’s — without adding to legal protections. Here’s a corrective viewpoint from Jeff Carr, lawyer and former P&L executive:

“Contracts really are simply business project management charters (who is going to do what when). We lawyers have made them far more complicated by focusing on what happens when something goes wrong. Far better to make sure obligations are understood and can be fulfilled.” Continue reading

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The Point

Two surveys of general counsel reported in December offer identical descriptions of the budget crisis facing corporate Legal departments in 2023:

(1) From the legal system: most face increasing demands, and

(2) From the C-Suite: most face cost reduction demands.

In such circumstances, executive management usually asks Legal for some measure of cost discipline similar to what they ask of other corporate functions and business units. Too often, Legal reacts by threatening a game of “chicken” with the business side: give us the funding we want, or the company faces potentially catastrophic risk.

C-Suites facing intransigence from Legal should consider a tool used where an employee’s performance has slumped, but summary dismissal would be premature: a performance improvement plan. Continue reading

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The Point

Since I first met him 5 years ago, I’ve come to regard Mark Cohen, along with the UK’s Richard Susskind, as one of the world’s two leading authorities on the legal profession’s future. Here’s what he wrote in his most recent regular column for Forbes, entitled “Law’s Delayed Future” (subscription required):

“The industry is a digital laggard, misaligned with the needs of business and society … Law’s future has been delayed by the legal profession, not by the absence of tools, resources, and a digital transformation roadmap ….

“If lawyers do not lead the legal function’s future, business will … The legal function … will be a proactive,  positive force in the enterprise, not a reactive, ‘department of no'”. Continue reading

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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

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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.”

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