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Your law department had to lay off a lawyer or two. Is that the end of it? No.

A long-term study of employees at Boeing over a decade of deep downsizing found that “survivors can suffer just as much, if not more, than colleagues who get laid off.” As explained in Business Week, Nov. 2, 2009 at 65, the survivors felt guilty, continued to worry that the hatchet might still fall, complained about loss of institutional knowledge, shouldered heavier burdens, and became emotionally numb and disengaged. General counsel should be sensitive to the ongoing trauma even for those who keep their jobs.

Mergers also lead to RIFs (reductions in force) and the same psychological phenomena can occur. Among Boeing’s thousands of employees, “depression scores were nearly twice as great for those who stayed with Boeing vs. those who left. The laid-off were less likely to binge drink, often slept better, and had fewer chronic health problems.”

During a discussion on management with Cheryl Solomon, general counsel of the Gucci Group, she mentioned that she does quite a bit of actual legal work. It includes review of contracts, negotiations, pleadings, and work product created by other lawyers.

When do general counsel stop doing real legal work? Even deeper, what constitutes “real legal work”? Some chief legal officers delegate almost all the legal work. The factors are too numerous to permit any rule of thumb, but it does seem almost certain that the larger the department, the smaller the percentage of time the top lawyer devotes to hands-on legal work.

Cheryl Solomon, general counsel of the Gucci Group, leads a team of 30 lawyers and paralegals worldwide. I interviewed her recently about a number of management topics. One was my belief that general counsel only occasionally get involved with retentions of external counsel. So I asked about her situation (See my post of May 30, 2005: GCs often not part of firm selection; and April 4, 2008: GC’s limited role in firm selection.).

“About once a year I travel to meet my inside counsel and review with them the big ticket matters and get a feel for them and the firms they are using,” she said. “Otherwise, if they think I ought to know about a firm selection, they come and discuss it with me.” Or if they feel she has some knowledge of the firms that might be chosen, e.g., litigation, they will solicit her views. Sometimes she and her team have ongoing discussions about whether they are using the right firm for a particular matter.

Solomon pointed out that “A lot of my reports report to me functionally, not directly, so I could not easily mandate which counsel to use or to change counsel.” Gucci Group is a very decentralized company so sometimes it is hard to know what is a retention of counsel, e.g., trademark agents or firms just for anti-counterfeiting work. Do they each count as a retention?” Also, since “I do plenty of hands on work, I choose counsel for what I work on although, often, we have developed long-term relationships with certain lawyers in particular specialties.”

In the end, after explaining these various factors, Solomon ventured that “it could be at least half the time” that she is involved in the choice of which firm is retained, at some level.

One estimate does not a benchmark make, obviously, so I will continue beyond this data point. I am sure, still, that the larger the department, the smaller the percentage of CLO involvement.

"You can't prevent people from gaming numbers, no matter how outstanding your organization. The moment you choose to manage by a metric, you invite your managers to manipulate it. Metrics are only proxies for performance. Someone who has learned how to optimize a metric without actually having to perform will often do just that. To create an effective performance measurement system, you have to work with that fact rather than resort to wishful thinking and denial." This blunt reality comes from the Harvard Bus. Rev., Vol. 86, Oct. 2009 at 100.

A drawback to any benchmarking scorecard, therefore, is the risk that whoever’s ox is gored may turn to bull. Numbers will mysteriously transmute (See my post of March 11, 2009: gaming and manipulating with 12 references.). People will adjust their efforts and reporting to the priorities set by benchmarks.

Some of the article’s solutions to the problem of gaming are to (1) diversify the benchmarks, because it is harder to play around with several at once; (2) draw on various sources for metrics, because it is more difficult to fiddle with multiple contributors, and (3) vary the time periods covered, because that creates different scales and intervals. Another solution is to gather the metrics over several periods of time. A lawyer, for example, might manipulate the number of patents filed by splitting some inventions into more than one patent, but if the lawyer regularly does so there will still be meaningful data over several years. Stated differently, inflated or distorted measurements, when done consistently, still yield insights about performance -- perhaps not the underlying "true" performance, but relative to prior years.

Nearly all my posts about offshore legal resources relate to India. Still, I have mentioned similar undertakings in a number of other countries yet here is a new entrant: New Zealand (See my post of April 13, 2008: Malaysia and HSBC; Jan. 27, 2006: Mauritius and Accenture; Nov. 27, 2007: Israel; June 17, 2009: China and the Philippines; and March 6, 2009 #3: South Africa and an LPO trade group.).

A post on the Orange Rag announced that Latitude South NZ Ltd has launched a legal outsourcing offering, designed for UK in-house legal teams and law firms by using a team of New Zealand-based lawyers with UK and international experience along with a team in Singapore and an onshore presence in London.

”Latitude South claim their services will enable savings of up to 50% on substantive legal support services including professional support and know-how services, the design of standard form agreements, the drafting of bespoke documents, and peer review. Latitude South will also provide project management and legal process engineering services to help unbundle the substantive legal work appropriate for outsourcing.” Peer review?

Someday soon, in-house counsel might wear an emotion-sensing system designed to help them keep a cool head when negotiating, litigating, or dealing with obnoxious people. The Rationalizer, still under development by Philips, consists of a bracelet that measures the wearer’s galvanic skin response. This response measures the electrical resistance of the skin that can be caused by various stimuli. Your skin knows when you are upset.

According to an article in the Economist, October 17, 2009 at 85, "the bracelet transmits its measurements to the ‘EmoBowl’, a saucer-like object which displays a moving light pattern to illustrate the user's mood. If the person becomes emotionally aroused, the light pattern becomes more intense and turns from a soft yellow to orange." If it reaches deep red, the lawyer should count to 10 and try to calm down. Such an obvious alarm will not do in plain view amidst a tense meeting, but more subtle reminders, such as a dial on the bracelet, presumably could alert the wearer to take a break.

Posts before this one have dealt with the effects of a merger mostly in terms of law department headcount (See my post of Jan. 16, 2009: layoffs after mergers with 9 references.).

Another post-method method by which companies squeeze out savings is to limit the surviving general counsel to a budget increase that is a portion of the acquired law department’s budget. Maybe the general counsel can add only 30 percent of the other department’s cost basis, maybe 40 percent. At least that limit allows the general counsel some latitude in how to achieve the cuts.

When lawyers at GE Canada rate external counsel, they state how likely they would recommend the external lawyer to someone else. As explained in the ACC Docket, Vol. 27, Oct. 2009 in an ad supplement by Ogilvy Renault after page 64, lawyers use ratings of 9-10 (“likely to recommend that lawyer to someone else”), 7-8 (“unlikely to recommend”), and 0-6 (“absolutely not”) (See my post of Nov. 8, 2009: overall performance questions on surveys.).

Once all the ratings are in for a firm, someone discards ratings of 7-8 and then subtracts the ratings of 0-6 from ratings of 9-10 to arrive at a net rating score. Ignore the middle, then subtract the low scores from high scores. This methodology applies Frederick Reichheld’s widely used Net Promoter Score (See my post of Oct. 18, 2006: net scores combined.).

Raw numbers have some usefulness, but much more if they are fitted into a context by being weighted. So, for instance, 100 patent applications filed in 2009 tells something about a law department, but that number weighted by R&D spending or invention reports submitted or revenue of the company tells more. Or giving a weight to that figure in comparison to some other figure, such as licensing fees received, puts the figure in perspective.

For that reason, more insight in context, this blog has frequently mentioned various circumstances where weighting numbers makes sense (See my post of Nov. 30, 2005: one way to compute a weighted average; Dec. 31, 2006: a second way to calculate a weighted average; Nov. 25, 2006: weight surveys that cover multiple business components by component revenue; Feb. 20, 2006: a weighted average for litigation cycle time; Feb. 6, 2007: weight the components of law firms’ proposals; April 16, 2009: weight RFP responses; Sept. 5, 2007: probability-weighted sample; Dec. 31, 2006: how to weight lawyers per billion by revenue; March 25, 2009: weightings and a grid analysis; April 1, 2009: benchmarks should calculate weighted averages correctly; June 15, 2009: weight survey results to be nationally representative; and Nov. 8, 2009: weight multiple attributes in evaluations of law firms rather than ask a global rating question.).