In this blog I describe how to use effective management and liability prevention to control corporate legal costs. This calls for a certain amount of detail.

But in providing that detail I want to be sure not to lose sight of what this blog and my law practice are all about. Simply this:

When a company’s management is unhappy with the job their lawyers are doing, I help its owners or executives to put something better in place to achieve their business goals.

Half a decade ago Harvard Law School’s Professor David Wilkins announced that the legal industry had entered “the Global Age of More for Less” (see this speech, and this journal article).

The response from all but a few attorneys: Crickets.

Seen in the light of their cost-plus business model, “more for less” just sounded to them like “less” money to pay for “more” time. With a “management” technique that consists of assigning bodies-to-tasks, the legal industry is blind to process efficiencies, competitive pricing, and other skills that anyone who works to a P&L has already mastered.

As a result, law firms and in-house counsel won’t acknowledge that the collision between the legal system’s skyrocketing demands and company budgets (that have more constructive uses than to pay attorneys) is unsustainable. Instead, the legal industry tells business clients that the best they can hope for is to minimize (what they tell us are) the inevitable increases in their legal and regulatory line items.

Casey Flaherty, an insightful lawyer who advises corporate law departments, describes attorneys’ prevailing mindset:

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Company owners and executives need to take charge of legal and regulatory affairs in order to control legal costs, prevent liability, and otherwise cope with the legal and regulatory system’s increasing demands upon business. 

Because their lawyers won’t do it for them. 

Consider last week’s diagnosis (here and here) from Ken Grady — one of the legal industry’s leading visionaries: 


“Today, we talk about the legal industry going through a transformation. We point to new providers, the use of new tools such as project management, and the miracle of artificial intelligence and what it can and will do.

“But, if we look carefully at the legal industry, we can see that not much has changed from 100 years ago even with these tweaks ….”

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When I left the practice of law to accept a corporate client’s invitation to run a division, what I had to un-learn as a (then former) lawyer was even more important than the new skills I acquired as a general manager.  

None of this is meant to criticize the legal profession. It’s meant to help business owners and executives to identify who’s good at doing what roles — and then assign duties accordingly.

Early in my transition from lawyer in corporate practice to general manager I was supervising the closing on a large transaction. A combination of lawyers, my company’s commercial officers, and our customer’s finance people were busily reviewing a borrower’s most recent financials, finalizing lending documents, and arguing about whether or not all conditions precedent to final execution were in place.

Our chief operating officer — my new boss — motioned me out of the conference room.

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LawGeex — an Israel-based tech company whose artificial intelligence (AI)-based document review software automates the process of identifying risky provisions in contracts — has announced the results of a peer-reviewed study that compared artificial intelligence to human lawyers in the review of standard business contracts called non-disclosure agreements (NDAs).  

The LawGeex AI platform achieved 94% accuracy compared to an average of 85% among 20 human lawyers.

And timing? The human lawyers took an average of 92 minutes to review all 5 of the NDAs involved — and the AI platform took 26 seconds.

Why is this important? Because the review and approval of low-value, high-volume, day-to-day business contracts is a core business task that historically has required manual review by qualified (human) lawyers. The typical Fortune 1000 corporation maintains 20,000 to 40,000 contracts at any given time. And 83% report dissatisfaction with their contract management processes.

As to the kind of contracts reviewed in the study — NDAs — they typically take one week or longer to get approved (an experience I often endured as an executive at GE and Whirlpool).

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One practical consequence of the big gap between attorneys’ excellent formal schooling and the skills they need to do excellent work for clients:

Attorneys who graduated from law school 4 years ago or less typically lack the skills they need to serve the client independently — i.e., without “supervision”.

Leading law practice consultant Jordan Furlong initiated a discussion in which he asked lawyers who’d begun their careers as law firm associates and who were now partners at law firms or held other responsible law practice roles in companies: “How many months and / or years did it take before you felt like a reasonably competent and confident lawyer?”

Two dozen lawyers went on record and named their firms / organizations:

“The lowest number of years offered was two, the most was ten, but the frequently cited median was five.”

“Only one person said they never felt unready for law practice; everyone else said, essentially, ‘It took me years to feel like I knew what I was doing.'”

This certainly corresponds to my own experience in a large Wall Street firm — and with what I witnessed in a smaller firm on the West Coast after I was fully developed as a lawyer myself and saw others struggling.

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There’s not much in the way of practical how-to instruction for new attorneys. So there’s a big gap between their excellent formal schooling and the skills needed to do excellent work for clients.  

This gap poses two practical consequences:

  1. Attorneys who graduated from law school less than 4 years ago typically lack the skills they need to serve the client independently — i.e., without “supervision”, and  
  2. The presence of junior lawyers on legal teams usually means that the client company pays for what law firms themselves sometimes refer to as their “training”. 

About this “gap”.

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In Part I of this two-part series I contended that the vast majority of law firms and in-house departments haven’t adopted Six Sigma, Toyota “Lean” protocols, or other process improvement standards because the legal industry’s cost-plus business model undercuts any incentive for operational efficiency.

Undercuts how?

Law firms and in-house departments “organize” their work by simply assigning bodies (of admittedly smart people) to tasks. 

So the adoption of systematic, measurable processes of the kind long since developed everywhere else in your company would reduce lawyer-bodies-assigned (and hours worked). That’s not what legal industry — its business model — is designed for. 

This Part II addresses a rare exception: The“Electronic Discovery Reference Model” — EDRM — a collaboration between lawyers, companies, technology providers and legal process outsourcers to create business process and technology standards for cheaper and more accurate “e-discovery”. 

“E-discovery” stands apart from most legal industry tasks. Because here the incentives favor — in fact they require — operational efficiency.

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The vast majority of law firms and in-house departments haven’t adopted Six Sigma, Toyota’s “Lean” protocols, or other process improvement standards.   

Why? Because the legal industry’s cost-plus business model undercuts any incentive for operational efficiency. The legal industry doesn’t structure its work into activities sequenced in a specific order to produce a service or product for the customer. 

Instead, both law firms and in-house departments assign bodies (of admittedly smart people) to tasks. They aren’t motivated to take process improvement seriously because their work flows aren’t sufficiently organized to be called a “process”.     

Six Sigma at GE — Motivation Driven from the Top Down: 

As an executive at GE I saw firsthand how incentives for operational discipline drove Six Sigma adoption under Jack Welch.

More accurately, Jack Welch himself was motivated to drive those incentives down into the rest of the company.

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