Adding a New Lawyer
Author: Richard Stock - Lexpert (April 2011, Vol 12, No 5)
How does the General Counsel make the business case to add another lawyer to an established legal department? The company with only one lawyer finds it difficult to accept that another is needed now that they have their lawyer. Departments moving beyond five lawyers face a level of complexity in the alignment of resources with client groups. The floodgates are open and workflows and workloads are a continuous challenge.
Organizations with at least five lawyers will be fairly large and will continue to rely on external counsel for litigation as well as for specialty work like IP, tax, regulatory and labour / employment. Managing relationships and performance with law firms also consumes resources. Our research shows that about 70 % of law department positions, outside of government and the insurance industry, are corporate and commercial in nature.
Sometimes there is a vacancy in the department. This represents an opportunity to bring in someone younger or perhaps with a different specialization. More often than not, though, the work is piling up, deadlines are missed, referring overflow to law firms is too expensive and morale is slipping. Overall, there is little light at the end of the tunnel. In our experience, the company waits too long to address chronic workflow and workload problems. Too often, only the arrival of budget season focuses attention.
There are several steps to preparing the business case for additional resources, and it requires more than completing the annual budget forms. First, begin by taking a careful look at the company’s business plans for the next 2 – 3 years. Are there special projects, regulatory issues, or a large portfolio of litigation that need to be managed? Second, look at the volume and frequency of daily demand for operational support work in every business unit. For companies where the lawyers are well-integrated into the work of the business unit, it may be difficult to reduce support in a meaningful way that creates capacity and decompresses workloads. Still, larger lawyer departments are investing in technology like Sharepoint and developing software (resources) which allow the business to function without calling on their lawyers quite as often. A reduction of 15 % in demand and interruptions for a 5-lawyer department generates about 1 600 hours of capacity each year. That is the place to begin and makes a difference provided the productivity gain is harvested and, with some discipline, invested elsewhere in the business.
For some companies, more than half of the external legal spend is for litigation. Often, the complexity of the cases varies. Moreover, the files are at irregular intervals and geographically dispersed. It is impractical to in-source the work. However, it makes a lot of business sense to dedicate a full-time position to litigation management, handled by a senior lawyer. Experience as a litigator means legal strategy, detailed matter budgets, and management of expectations with external counsel will reduce an annual litigation budget of $ 1 M by 20 %. The number of hours will be less and delegation will be better balanced. Add to that the fact that 40 % of legal departments request no discount from their law firms, and that alternative fee arrangements (AFAs) are used less than 10 % of the time for complex work. The savings / cost avoidance will exceed 20 % every time – more than enough for a business case to add a lawyer.
The majority of legal departments are under-resourced. Few companies will volunteer to add lawyers. Lawyers aim to please, and try to do it all. But service levels and morale are eroded. It is up to the General Counsel to make the business case. The pain is worth the gain.