Articles Posted in Managing Your Lawyers

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.

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“.

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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.

 

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.”

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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.

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

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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.

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‘.”

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.

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