Person of the Year

After graduating from Georgetown University’s School of Foreign Service, I had an offer in hand to work for the US State Department, but decided instead to go to law school. Many of my classmates chose to go into the US Foreign Service and I often wonder, more with curiosity than regret, where I would be if I had followed that path. With this background, I have followed the WikiLeaks publication of confidential diplomatic cables with more than a passing interest.

WikiLeak’s founder, Julian Assange, has a naïve teenager’s belief that discretion, circumspection, and confidentiality are the hallmarks of a corrupt adult world. As in most human endeavors, discretion breeds trust, which is an indispensable ingredient in diplomacy. Mr. Assange and his minions have hampered diplomatic capabilities and they should be ashamed of themselves.

I read that the Department of Justice has been considering ways to indict Assange, with most speculation centering on the Espionage Act of 1917, which prohibits the unauthorized possession and dissemination of information related to national defense.

If WikiLeaks should expand its exposés to information stolen from private enterprises, I would suggest that a prosecution under the Economic Espionage Act of 1996 (“EEA”) might be possible.

Sections 1831(a) and 1832(a) of the EEA punish any individual who:

(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice or deception obtains a trade secret;
(2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret;
(3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization ….

Sections 1831 and 1832 differ in the parties to which they apply. Section 1831 punishes all of the acts listed above when knowingly undertaken by anyone “intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent.” Foreign companies or individuals do not fall within the scope of section 1831 unless they are “substantially owned, controlled, sponsored, commanded, managed or dominated by a foreign government.” This Section probably would not apply to the WikiLeaks case.

Section 1832, however, is a general criminal trade secrets statute. Despite its inclusion in the Economic Espionage Act, there is no requirement of foreign espionage in this provision. Rather, it applies to anyone who knowingly engages in any act of misappropriation “with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret.”

While Assange is not a US citizen, Section 1837 governs the applicability of the EEA to conduct which occurs, in whole or in part, outside the United States. The territorial reach of the statute is extremely broad. It applies not only to acts conducted entirely within the United States, but also to foreign schemes, provided any “act in furtherance of the offense was committed in the United States.”

Violations under both sections of the EEA are felonies. Section 1832 provides for a term of up to ten years in prison and fines for individuals, and fines of up to $5 million for corporations or other organizations that violate its provisions.

I would imagine that the Department of Justice is exploring using the EEA as a method to bring Assange to justice.

The irony of the whole WikiLeaks matter is that the leaked diplomatic cables, rather than unearthing shocking revelations of conspiracy, demonstrate that the US State Department is composed of hard-working, earnest, thoughtful, capable and dedicated citizens. Perhaps these professionals, toiling in relative obscurity to advance American interests abroad, are the ones who should be on the short list for Person of the Year, rather than the voyeuristic and puerile Mr. Assange.

Happy New Year and Best Wishes to All for a Happy, Healthy and Prosperous 2011 !

Making a List, Checking it Twice

This time of year is about lists: Lists of New Year’s resolutions, Santa’s list of naughty and nice kids, Christmas card lists, top ten lists of the year just finishing, etc. For a great book on the simple, yet powerful, concept of list-making, read Atul Gawande’s The Checklist Manifesto. A surgeon by trade, Gawande shows the power of checklists in the medical world, but his manifesto goes beyond merely extolling a common learning tool. To Gawande, a checklist is the quintessential embodiment of captured and communicated knowledge and is the perfect “swiss army knife” to use on our increasing complex world.

Checklists can overcome the strange cognitive deficiencies that we humans are subject to. For example, Gawande cites the fact that surgical errors drop dramatically when the operating team knows each other by name, so pre-operation introductions became part of his checklist.

Much of the resistance to checklists comes from experts thinking they don’t need to rely on such crutches- I have seen that complaint from lawyers- but in my experience checklists liberate the professional to focus on the cutting edge of their practice- the unknown frontier where human intuition operates at its best. For the thousand routine, yet highly critical and complex tasks, it’s best to automate those factors, and a checklist is a great place to start. I intend to develop many new checklists for my practice next year.

In the meantime, put The Checklist Manifesto on your 2011 reading list.

Best wishes for a very Happy Holiday Season to all !

Risky Business

After living through the economic conditions of the last two years and after reading Nassim Nicholas Taleb’s The Black Swan, one would not be blamed for throwing up one’s hands and conceding that humans are not very good at measuring, assessing and protecting against risk.

Surviving and Thriving In Uncertainty: Creating the Risk Intelligent Enterprise by Frederick Funston and Stephen Wagner strikes back against such despair and provides a useful analytical framework for assessing risk.

The authors boil risk assessment failures to ten factors, many of which are caused in large part by common human cognitive flaws such as, failing to challenge assumptions, expecting the future to look like today, failure to remain vigilant, ignoring interdependencies, underestimating rates of change, taking facts for granted, not providing a safety margin, organizational sloppiness, and short-term thinking. Admittedly, many of the “risk intelligence” skills offered by the author are largely common sense, but this serves to underscore the difficulty of institutionalizing common sense in an enterprise.

The authors also score points for highlighting a failure to take risks as a risk in itself. Intelligent risk management not only preserves current assets, but also expands the opportunity for future income streams.

For a more historical perspective on risk, I recommend Against the Gods: The Remarkable Story of Risk by Peter Bernstein. This engrossing work reviews the creation and development of risk management (i.e. the idea that future events can be understood, measured and predicted) by surveying the history of probability theory, statistical sampling methods, business forecasting, game theory, insurance and derivatives, and chaos theory.

Against the Gods, The Black Swan and Surviving and Thriving in Uncertainty make for a recommended trilogy for any in-house counsel looking to provide some rigor around risk assessments.

The butterfly effect is a concept from chaos theory that holds that small factors may create huge variations in a system; the idea being that a butterfly flapping its wings in one part of the world could conceivable lead to a hurricane in another part of the world. Applying that metaphor to risk assessment, I wish that you may always capture your risks when they are still butterflies.

Here's to the Hall

Being an in-house attorney, understanding finance, accounting and general business theory is an indispensable skill, so after practicing law for seven years, I decided to get my MBA. I view my law degree and business degree as wings of an airplane- both are needed for flight. I went to the Stillman School of Business at Seton Hall University at night, starting in the fall of 1995 and completing my classes in December 2000. At the May 2001 Stillman School of Business graduation ceremony, I was fortunate to be able to give a commencement speech to my classmates. In honor of the ten year mark of completing the degree, I thought I'd reintroduce the text of my speech in this blog.

I. Introduction

Congratulations.

Congratulations to each and every one of you who have worked tenaciously to receive the degree that you are receiving here today.

One of the unexpected joys of writing this speech was that it forced me to assess my feelings about Seton Hall and my five years here. It’s really impossible for me to distill my time at Seton Hall down to a few minutes presentation, much less to presume to speak for the varied range of experiences that each of us has lived through while earning a graduate degree. Some of us studied management, others finance, still others toiled for advanced degrees in taxation, accounting, or even joint degrees. Some of us came to campus at night after work, others dedicated themselves to school full-time, some of us came after being in the working world, some straight from college. Each of us carries our own memories and moments and this event has unique significance for each of us individually. Even so, despite these disparate backgrounds, perhaps we do share some common perspectives about graduate school.

II. Our Common Bond

Perseverance

One likely shared feeling is the satisfaction that comes from perseverance and promises kept to ones self. We live in constantly accelerating times, but I believe that there still must be a constancy of core values, an anchor that allows us to be true to our higher instincts and not be blown off course. Each of you knows what I mean by this because you have demonstrated, through your actions, a dedication to the core value of education.

Empowerment

Another feeling we should all share is one of empowerment. Speaking for myself, not a day goes by that I am not able to perform my job better, to analyze a problem better, and to create solutions to work issues more adeptly due to the disciplines and skills that I picked up in my classes at Seton Hall. Each of you now also possesses this powerful and unalienable tool kit to improve both your individual life and our wider society. The diploma that we receive is merely a physical manifestation of that tool kit, but what you have really earned is inside of you, and that learning gives you immense power in your chosen field.

Education prepares students to join the timeless dialogue of the world’s great minds. Armed with your knowledge and your diploma, you are now ready to enter into that dialogue in your chosen field and to embrace it with the passion that motivated you to seek this degree in the first place.

For me, I have always been interested in business as a profession. Although many view the professions of business as mercenary arts, business, in fact, is a true profession and perhaps even a calling. Business is an amalgamation of an astounding scope of disciplines- marketing, psychology, law, management, human relations, economics, finance and others. Business intrigues me – at root it is the study in the practical aspects of how humans live their everyday lives, how they buy what they buy, why they work as they work, why they organize as they do.

Business has a fundamental effect on peoples’ lives and standard of living. Business, because it transcends national boundaries, has the ability to create and topple empires, and decisions made by business managers can sustain economies or break them. Just as the power of business over our lives is immense, so is the responsibility of those who take the mantle of business leadership to be capable stewards who respond to the better angels of our nature.

Be it the business world or another profession, your knowledge gives you power to change the world (or at least your corner of it) for the better and I challenge each of you to accept that undertaking.

Enthusiasm

At this ceremony, I am certain that we also share a certain excitement or enthusiasm toward the future. Seton Hall has given me a renewed enthusiasm for my profession. The word “enthusiasm” has its origins in the Greek word theos and means to be filled with God. This enthusiasm, or being filled with God, creates the passion and confidence that makes all the difference between success and failure. Churchill once said that the greatest blessing was to have a career that one enjoyed so much that every work day was like a vacation and every day off like an enforced absence from a loved one. Now that’s enthusiasm! May you all find such happiness in your career.

Gratitude

One last emotion I am sure that we all share is gratitude. Without the dedicated professors, staff, and administration, Seton Hall would be nothing more than an empty collection of lecture halls and dorms. The professors who routinely stay after hours to accommodate students, who challenge us to think, who inspire us- On behalf of all here today I offer a thank you to the Seton Hall faculty and staff.

I also thank my fellow classmates for their contributions to class discussions, joint projects and general friendship. An important part of life is about collaboration and building bridges of respect and I thank you for that opportunity.

I also give a special thanks to the families, spouses, parents, children, significant others, friends, work colleagues and employers, whose loyal support was unwavering, profound and sublimely patient. It would have been impossible to complete this endeavor without you.

III. Conclusion

It amazes me how a journey that seemed so daunting at the outset can in retrospect seem to have passed by so fast. But this phase of the journey is now complete.

It is a true honor for me to have the opportunity to address this class. Congratulations again to you all.

The Teaching Law Department

I’ve written about knowledge management and the importance of cultivating a learning law department. The other side of the equation is the teaching law department. At its simplest, a teaching law department is one that provides frequent knowledge transfers and feedback to its members. I enjoy seeing colleagues expand their skill sets and stretch their professional capabilities. Obviously, the hope is that this habit of continual learning will lead to expanded opportunities and rewards within a company; but when, on occasion, a colleague leaves the nest to pursue another role, I am always gratified if the training received in our department played a part in their success.

As part of our “teaching” efforts, we have instituted an externship program with our local Charleston School of Law. In this program, second and third year students join our department for twelve hours a week for a full semester. We’ve run the program for five semesters now and I have sharpened my view of how to bring the most value to both the students and to Blackbaud. My vision is to give each student a broad survey in all the areas that in-house counsel manage (e.g. commercial, IP, risk management, corporate governance, operations), and to have each student manage a particular project that they can call their own. For instance, in semesters past, we have had the externs create arbitration model forms, FOIA kits, marketing seminar materials, and taxable entity registration matrices. In this manner, the students get a general view of in-house counsel life, but also get a deeper dive into a particular area of importance to the company. It’s taken a few semesters for me to get the program just where I want it, and I’m still tinkering with a few aspects, but it’s been a rewarding experience.

It appears to be working for the students too. We are never at a loss for applicants and we have had two other regional law schools ask to be part of the program.

Also, we are starting to see our first set of externs graduate, and, as noted above, I am always gratified when I see them succeed, and hope that our externship program offered at least a little bit of help, even if only to inspire them to see how law can add value to an enterprise.

I myself have been fortunate to be a member of law departments where continuing learning was an important aspect of the company culture. Richard Rawson, the general counsel of Lucent from 1995-2002, was particularly enlightened in this respect. He made sure that the attorneys in his department were given the opportunity, as much as their experience level permitted, to rotate through different substantive areas. This not only broadened their legal expertise, but also gave counsel a more complete view of the different areas of the company, thereby deepening the value of each attorney to the company.

I am thankful to have had these learning opportunities at my various employers over the years and hope to share this same approach with my charges.

Our Digital World (E-Discovery)

I originally wrote the following article on e-discovery in 2006 for a LexisNexis newsletter. Given that this is a holiday week, I thought I'd save some time and recycle this piece; plus, e-discovery is still highly relevant to the in-house practice. Also, I thought I'd better publish this before CSI is cancelled and the controlling analogy becomes obsolete.

Happy Thanksgiving to All !

All the Things We Leave Behind
Our Digital World: Transforming the Records of our Existence

Call it the CSI factor. Detectives on popular television shows, such as CSI, tirelessly scrutinize crime scenes for the fabric threads, skin cells, single hairs, and chemical traces that will clinch cases against evildoers. These shows highlight the detailed molecular fingerprint that each person leaves behind in the wake of their daily actions. We may think we pass our days with the evanescence of a ninja, yet we leave behind solid and indisputable evidence of our presence and our actions.

So too it is with businesses. In days gone by, the vast majority of our working thoughts and utterances evaporated inconsequentially like breath on a frosty morning. With the rise of the digital world and its new methods of communications (e-mail, instant messaging, voice mail), our quotidian efforts are now frozen and recorded, ready to be thawed out and played back for the benefit of a prosecutor or plaintiff.

Size estimates of the digital wake created by today’s corporations are truly astounding. Businesses create over seventeen trillion e-documents annually. Nearly sixty billion e-mails are generated each day (you may believe that you are cc’ed on at least two billion of these). Not only are there more e-mails than ever, but also the size of an average e-mail continues to grow. In a recent study, one research group found that an average individual sent or received nearly 10MB of e-mail each day in 2003 with an estimated increase to 46MB a day in 2005. Some researchers posit that 99% of all new corporate data is created electronically, with something less than a third ever being printed as a hard copy.

Adding to the ever-increasing layers of digital data are metadata, which is the additional information contained in an electronic version of a document (e.g. when created, when last modified, revision marks, stored comments) that its paper counterpart may not contain.

The ease of creating digital data is surpassed only by the ease of storing it. Back in the day, the costs and effort involved in creating and storing paper documents acted as a brake on the preservation of documents. Today companies routinely save nearly everything in back-up servers or stored tapes. One Fortune 100 company calculates that it routinely stores 800 terabytes of information, which would convert to an eye-popping half –trillion (yes, that’s a “tr”) pages if printed out. For a visual reference, one terabyte of data printed out would fill a small ballroom.

In my early days in private practice, I remember mind-numbing days spent reviewing ancient insurance policies and related letters to assess coverage claims. Looking back, I realize, however, that I only had to survey one hundred bankers’ boxes of materials. With the proliferation of digital documents, so easily created and so permanently recorded, such a task undertaken today is exponentially larger. Dante would certainly assign this task to a special circle of hell.

The ever-rising digital flood would only be an annoying social by-product of technology, like cell phones in restaurants, except for the complicating factors of the myriad laws and regulations governing the retention of documents and data. Sarbanes-Oxley, SEC regulations, the Internal Revenue Code and HIPPA all contain document retention mandates. Courts are also imposing significant penalties for spoliation of digitally stored documents, including monetary damages, adverse inference instructions and the occasional entry of judgment.

Court rules are beginning to reflect the immense importance of electronic discovery. For example, the District Court of New Jersey has promulgated a local rule that requires counsel to investigate a client's information management and other digital storage systems, including historical and backup information, prior to a discovery conference. Counsel must also list individuals with knowledge about the client's information management systems. Most critically, the local rule imposes an obligation for the parties to confer and attempt to agree on electronic discovery issues. Clearly, sophisticated handling of e-discovery and related issues provides a substantial advantage in both prosecuting and defending lawsuits.

However, even as the courts grapple with current electronic communications methods, technology marches on. If dealing with e-mail, its attachments and its metadata were not enough, there are new collaborative applications that promise to add more complexity to e-discovery. According to a recent Business Week article, companies such as Disney, Kodak, Yahoo! and the US military are switching their emphasis from e-mail to other software applications to create virtual workplaces.

These new applications include user-editable websites known as wikis (Hawaiian for “fast”), web diaries known as “blogs” (short for weblogs), instant messaging (IM), and groupware such as Microsoft's SharePoint. There is no doubt that a communication as ephemeral as IM is legally considered a document and is subject to the same retention policies and discovery requirements as any other written communication. Similarly, documents created using the other collaborative applications mentioned above will also be subject to discovery and the real-time collaborative nature of these software tools, so appealing for business users, will prove vexing for litigators.

The ultimate lesson is that our digital world mandates that a company take control of its record creation and retention process in ways infinitely more rigorous than ever before. Relegating document life-cycle management to an ad hoc system is a recipe for disaster.

On the front end of the document life cycle, employees must be trained and frequently reminded that despite the informal, uninhibited style encouraged by modern written communications, such documents are not private, not anonymous, nearly indestructible and subject to litigation discovery. Employees should consider whether a document is even necessary, particularly in areas that are controversial and subject to misunderstanding.

An additional side benefit of mastering the records management process is the salutary effect it can have on knowledge management efforts. Having a comprehensive document storage taxonomy can help a company leverage the knowledge inherent in its corporate databases.

It is beyond the scope of this article to tailor suggestions for the multitude of corporations facing electronic document retention and discovery issues, but prompt and thoughtful action is a must. Otherwise you may find yourself one day on a witness stand being called to account for some piece of data, some molecule of your self, that you didn’t even know you left behind.

Decisions, Decisions

Whenever you see a successful business, someone once made a courageous decision. –Peter Drucker

Corporations are essentially giant decision-making machines. The quality of an enterprise’s decisions largely determines its success in its chosen market. In his book, Decide and Deliver, Michael Mankins, a partner with management consulting firm Bain & Co., measures decision-making capability in four ways:

• Accuracy of decisions- what percentage of your decisions was correct;
• Speed- how quickly are decisions made;
• Decision yield- what percentage of decisions led to the desired actions to bring the decision to life;
• Effort and cost of decisions- how much time, money and effort goes into making decisions.

This is a useful lens to view decision-making capability, but I would add some qualifying comments and a few more key dimensions.

Accuracy of decisions may be the most deceptive measure of all because it assumes a steady state environment for decisions to play out. As such, the key assumptions that affect a decision should be clearly enumerated so that should a key assumption change, the enterprise can monitor the situation and correct course as necessary. The goal of management should necessarily be to make good decisions, but post-decision monitoring will allow leaders to “make decisions good” by adjusting on the fly.

Speed to decision may have a correlating effect to accuracy of decisions, but perhaps not. That would be a great study for a PhD Thesis. Until such work is done, I would suggest that the best approach is deciding at such time as the marginal value of more information falls below the marginal value of waiting. Easy to write, but hard to do. In my experience, people wait too long for more information to decide because they long for “perfect” information. To have that “perfect” information is a rare state and devalues the information that is available. I often tell my team that “There are six billion people on earth and no one knows this topic better than you, so make your best decision and be done with it.” That perspective frees people from the burden of waiting for the last piece of information.

Decision yield is more an operational concept. How often do your decisions yield their intended results? Perhaps a decision is too complicated to execute, is beyond the resource capability of an organization or relies on too many uncontrollable variables. A decision that cannot be carried out is not a good decision. Problems in this area may relate less to decision making, than to self-awareness.

Decision effort and cost seems to be an expansion of the concept of decision speed. Time is a resource, as is money and human effort. Is too much being spent on the process of reaching a decision? Or worse yet, is too much being spent on the process of not reaching a decision?

Beyond these four metrics, I see some additional ways to gauge decision-making quality.

One other factor is decision velocity- by this, I mean the sheer number of decision that an organization makes. As a company surveys its ecosystem, it should be continually assessing new opportunities to incorporate into its chosen strategy. This assessment of the new often falls to the wayside when dealing with the day to day routine, but is of critical importance to maintain adaptability in a changing business environment. Essentially, velocity measures not how a company decides, but the size of the universe that it makes decisions on. Narrowing the field of decision making is itself a sort of decision.

Another factor to measure decision-making adeptness is option preservation. In other words, does the decision preserve operational flexibility to make subsequent related adjustments if the original assumptions change? Leaders should make decisions that maximize future options.

Other operational aspects of good decision-making include ease of communication and consistency. Both of these attributes should contribute to an increased decision yield.

In life, decisions usually appear binary, “I do this or that,” but looking at decision-making in a deeper way makes one realize that decision outcomes are often more variable, multi-faceted and nuanced than expected. As corporate counsel, our role is to bring that nuance to corporate decision practices, and in so doing, improve the quality of the organization’s decisions and actions.

Hallmarks of Great Law Departments

This past week we held our annual law conference to discuss the strategic plans for our law department in 2011. Our meetings prompted me to ponder the question of what makes a great law department. At risk of being overly alliterative, I would suggest that a premiere law department should have these three attributes- impact, integrity, and innovation.

By impact, I mean that the law department should be a meaningful, proactive contributor to the success of an organization. A successful department cannot simply be a passive member, a sort of referee, to the game of business. It must seek opportunities to add value, by improving processes, managing and removing risks, and cutting hard costs. A great quote I saw recently said that “business people don’t have legal problems, they have business problems that require legal expertise.” Providing this expertise to make a positive impact is the first duty of the in-house legal team.

Integrity includes, of course, honesty and ethical behavior. These attributes are sine qua non for any attorney. I would also include under the concept of integrity the idea of consistency of action and communication- that is to say, to do what one says that they will do. Furthermore, the concept of integrity encompasses correctness of advice and responsiveness to a colleague’s request. The great law department should be seen to be as dependable as a clock.

Ezra Pound wrote that “the law must be stable, and yet it must not stand still.” Innovation is the process of managing this change and cultivating openness to new ideas. One cautionary note is in order here, and that is that managers should not become entranced with seeking an industry-changing “silver bullet” innovation, but rather recognize that the best innovations may be found in improving a thousand simple day-to-day choices.

Pushing the alliteration past the breaking point, I recommend that the great law department not be intrusive, inflexible, or idea-heavy, which are the negative corollaries to the attributes noted above.

By intrusive, I mean that while the law department must have a positive impact on the enterprise, the enterprise does not exist for the law department. Being a lawyer does not exempt one from the need to behave in a collaborative manner with other stakeholders in an organization.

While there can be no flexibility in matters of honesty and ethics, a law department must be flexible in its approach to problem solving. I advise an approach of “no… because… but” for in-house lawyers. By that I mean, if one must say “no” to a particular idea, one should explain the “because” behind the “no” and then add “but have you considered this…” This method encourages flexibility and dialogue to reach satisfactory outcomes.

By idea-heavy, I mean swinging for the fences when a single will do. In other words, ideas are great, but only when they rest on a foundation of pragmatic and achievable action. Removing a few simple obstacles daily may be the best innovation of all.

I’d be interested in hearing other people’s views on what makes a law department great.

On Diversity

Continuing the recent theme of hiring and performance management, I want to add a thought on diversity in the workplace.

A few years ago, I went to a seminar on diversity in the workplace. The thesis of the speaker was that very few people intentionally discriminate, but rather that individuals tend to be attracted to those who are like-minded and like-experienced. I’ve seen no hard data on how prevalent this phenomenon is, but I can see how this might happen. People naturally tend to look into their own networks when seeking a vendor, consultant or a job candidate and may be reluctant to stray too far out of their comfort zones.

Knowing that this “like-attracts-like” propensity can be subtle and subconscious, I strive to cast a wide net when making sourcing and hiring decisions and during the decision process I frequently take a step back to see if I have cultivated a sufficiently wide range of options. As it happens, two of my first three permanent hires and six of my first nine temporary hires have been from diverse backgrounds. Moreover, the majority of our billed hours from law firms in the past year have also been worked by attorneys from diverse backgrounds. I can’t take credit for those numbers because I didn’t do anything special to achieve that result, other than to seek as deep a talent pool as possible, and to remain open now and then to trying new approaches.

Annual Reviews

I have a like/hate relationship with performance reviews. Annual reviews often turn into sterile rituals. The dynamic of being judged does not suit most individuals. I endorse the idea of comprehensive and meaningful feedback with employees, and recognize it should be a constant effort rather than a once-yearly effort. On the other hand, a manager who was perennially didactic might become a bit tiresome. Moreover, it’s hard to give feedback on the fly during the “heat of battle,” so teachable moments are often lost. So maybe it is better to have performance reviews once a year, rather than not at all.

But the formats seem so standardized. Do all my accomplishments really fit into a matrix of specific, measurable, attainable, results oriented and time bound? Perhaps my greatest result was achieved by accident when I was playing around with an amorphous idea. Do all my deeds need to map into the 5, 6, or 7 avowed goals of the corporation for that year? All we really need is a blank piece of paper and an honest dialogue about what we hope to accomplish in the coming year.

Maybe performance reviews are a legacy of Frederick Winslow Turner, who measured all human output on a rigorously objective scale. That method may make sense if I am handling pig-iron, but does that work for lawyers? Perhaps it does; at least many law firms think so. This Taylor-esque approach sees man as a machine- fine tune here, polish there, find efficiencies, soon to achieve perfection.

But perhaps the goal of performance reviews shouldn’t be perfection and efficiency, but rather self-awareness which, at its best, allows people to tailor their efforts to achieve the most effective result. As Albert Camus wrote, “[A] man should know himself like the palm of his hand, know the exact number of his defects and qualities, know how far he can go, foretell his failures - be what he is. And, above all, accept these things.” Now that would be one heck of a performance review!

On Hiring

When hiring, I’ve found that there are only three criteria that really matter; can the candidate perform the job, can I see myself working successfully with the candidate and does the candidate really want the job. Oddly, the “can the candidate do the job part” is often the one that gets the least scrutiny. Once a resume is reviewed and that person is called for the interview, their ability to actually perform is generally a given. To counteract this presumption, it is useful to have candidates perform simulations, scenarios and testing- in the context of a legal hire, reviewing a contract or conducting a simulated negotiation. Awards, honors, and professional trade association activities can act as a measurement by proxy for this criterion.

The second standard- “can I see myself working successfully with the candidate” is, by definition, largely subjective. Key areas where a compatible working style matters most are in- how does a candidate like to be communicated with, how does a candidate make decisions, and how does a candidate deal with adversity. This is the area where the art of a good interview pays dividends and is important to have questions prepared in advance and asked in the same way of all candidates. While I largely trust my judgment on compatibility issues, I do like to solicit feedback from other interviewers to triangulate my intuitions. This also helps me fight the tendency to blindly trust my first impressions.

Often the least considered aspect is whether and why the candidate wants the job. The trick is to suss out what motivates a candidate and will this motivation lead to a continuing passion to improve on the job and a continuing happiness with what an employer has to offer. In my opinion, a mismatch of motivations is the primary reason for most job dissatisfaction and performance issues.

There are of course, other factors that get baked into a hiring decision including budget, location, timing, the state of the business, and the like. This post is not meant to be a comprehensive overview of my hiring strategy, but does provide some insight into my general philosophy. I’d be interested in hearing about yours.

Ship of Gold

In 1857, the SS Central America sunk during a hurricane off the Carolina coast, taking with it over 400 passengers and 30,000 pounds of gold. The story of the ship, its sinking, and its eventual salvage in 1987 by a group of deep-sea explorers led by Tommy Thompson (the marine engineer, not the politician), is chronicled in Ship of Gold in the Deep Blue Sea by Gary Kinder. Apart from being a rousing story of human endurance and adventure, Ship of Gold is one of the best business books I have ever read. Yes, I do mean business book; there is more to learn in this tome than in ten standard MBA textbooks. The story holds remarkable case studies in the importance of following one’s passion, managing vision, overcoming failure, raising capital, dealing with unique personality types, assembling teams, fostering innovation on the fly, and managing knowledge; and on a darker note, avoiding the treachery of unscrupulous competitors, dealing with overweening regulation, managing inevitable legal wrangling, and the managing the paramount need to preserve trade secrets.

Also of note, the author, Gary Kinder, is a lawyer by training, and teaches advanced legal writing courses throughout the US. I suspect that these classes offer great value to all who have the opportunity to attend.

In any case, if you have read Ship of Gold, please share your thoughts. Do not miss this superb book.

Questions into Answers

Most of my friends from high school gravitated to engineering professions. Although I didn’t follow an engineering path, I like to think of law as the physics of human dynamics. Unfortunately, human behavior doesn’t often follow the neat predictability of a scientific formula or a law of physics. Members of society tend to be fractious, inconstant, and unpredictable. The law seeks to impose order on a society of loose ends, incompleteness, and uncertainty. These imperfections can be frustrating to legally-trained minds because it violates the hope that for every problem there must be an answer, if only one had access to the right case, statute or regulation.

I have posted in my office the following quote from Rainer Maria Rilke, the great German poet of the early 20th century:

Be patient toward all that is unsolved in your heart and try to love the questions themselves…

To me, this idea invites us to consider that the uncertainties, gaps and imperfections of life are not hateful things, but rather puzzles which challenge our better nature.

Even better is the full quote which reads:

Be patient toward all that is unsolved in your heart and try to love the questions themselves, like locked rooms and like books that are now written in a very foreign tongue. Do not now seek the answers, which cannot be given you because you would not be able to live them. And the point is, to live everything. Live the questions now. Perhaps you will then gradually, without noticing it, live along some distant day into the answer.

And so in the midst of all the uncertainties, questions, and chaos of modern life, we live our answers. Similarly, the higher essence of law isn’t found in a statute book, but rather in an understanding of living, breathing human nature.

Ranier Maria Rilke (portrait by Paula Modersohn-Becker)

The Four Corners of Law

At the intersection of Broad and Market Streets in downtown Charleston one will find the Four Corners of the Law.

On the northeast side of the intersection, representing municipal law, is Charleston’s City Hall, built in 1800 and serving as the City Hall since 1818.

On the northwest corner, symbolizing state law, stands the Charleston County Courthouse completed in 1792. The courthouse was designed by architect James Hoban, who is best known for designing the White House.

On the southwest corner, the U.S. Courthouse and Post Office, designed by John Henry Devereux in the Renaissance Revival style and completed in 1896, embodies federal law.

On the southeast corner sits St. Michael's Church which was built between 1751 and 1761 on the site of an earlier 1681 wooden church that had been damaged in a hurricane in 1710. This structure stands for ecclesiastical law.

According to Ripley’s Believe It or Not, which popularized the notion of the Four Corners of Law in the 1930’s, this configuration is unique in US city planning. If anyone knows of a similar convergence of legal structures, please let me know.

Ordo ex Chao

Back in July, Rees Morrison, one of the leading thinkers in Law Department management, kindly quoted a comment of mine to his blog:

A theory of in-house lawyers between the devil client and the deep blue sea

A few days ago, Jon Olson, the thoughtful general counsel of Blackbaud,commented on my post about legal departments as multi-dimensional (mathematical) spaces. He explained his own theory:

“One theory that I find useful is the idea that law departments essentially manage the externalities of a business. That is to say, law departments manage the friction point where the untrammeled corporate will meets the greater society. It happens that many of these friction points are legal in nature; and the many that aren't strictly legal still benefit from good "lawyering" skills (e.g., the ability to communicate clearly, analyze an issue, build consensus). As such, the "space" is at the intersection of corporate strategy and the outside world, with all the layers of politics, culture, personal preference, laws, legal delivery systems, internal process and policy, risk appetite, and technology that entails. Multi-dimensional, indeed !”

Olson certainly envisions a transcendent, fundamental role for legal departments, on the ramparts between clients and the world with the protection going both ways. My image of in-house legal teams is less grand, to be sure, but Olson certainly sketches a fascinating perspective about the attributes lawyers can bring to bear and the contribution they can make.

Posted by Rees Morrison on July 29, 2010

Earlier that month, I had responded to another of Rees Morrison’s posts on positivism and law department management:

Positivism and its perspectives on knowledge about law department management

The set of philosophical beliefs known as “positivism” holds that objective truth exists, that humans can accurately understand those truths, and that scientific tools best enable us to do so. Measurement, rationality, certainty, and comprehension are neither ironic nor useless terms; they connote reliable and effective beliefs that are backed up by known truths. Those who put metrics and benchmarks on a pedestal adhere to positivistic beliefs. This blogger believes that we can actually know and understand much about legal departments and how they operate.

In opposition to positivistic views of knowledge are postmodern views (See my post of Sept. 22, 2008: postmodern critiques of best practices.). Postmods do not believe in objective facts or that ways of thinking have primacy over other ways of thinking. Much or all of what we perceive and think we comprehend is mere social construction, relative to a time and a place, subject to epistemological weaknesses of all kinds. This blogger sort of understands postmodernism, intellectually, but feels that as a way of coming to grips with effective management of legal departments it offers nothing constructive. My bent is pragmatism shot through with positivism.

Posted by Rees Morrison on July 8, 2010

My response:

I think that in-house counsel are necessarly positivists- not too many C-level executives or Board members are keen on having strategic plans, risk assessments, and financial forecasts deconstructed through a prism of relativism.

That said, many of the foibles of corporate life, sometimes irrational and occasionally ironic, do seem amenable to a post-modern interpretation.

Perhaps in-house counsel are the ultimate positivists, creating Ordo ex Chao, even where there is little order to be found.

Thanks for the food for thought.

-Jon W. Olson
GC, Blackbaud, Inc.

I offer these two items to shed further light on my philosophy of the role of in-house counsel. I do have a rather expansive concept of the role that law departments can play, but it does give us something to aspire to. And as Rees Morrison wrote me, Ordo ex Chao sounds like the motto for a coat of arms for GCs everywhere. Perhaps someone should design the coat of arms shield.

One other note- as summer officially ends, I will resume my previous schedule of one post weekly, usually on Monday.

Deconstructing Contracts

As it is for most in-house counsel, much of what I do involves negotiating contracts. Handling contracts is a task that needs to be taken seriously. “Contract in haste, repent at leisure,” I often say.

However, there is a distinct oddness to negotiating contracts. The issues that arise are often less about the substance of the matter and more about form. I’ve seem parties choose to make life-or-death issues out of the most apparently meaningless items. Parties will propose awkward language then rationalize that the most oblique, obfuscating phrase somehow satisfies their concerns. Negotiators will predict the future with a certainty that exceeds their ability to describe the present. So what’s it all about?

To me, contract negotiating is a ritual; the process is designed to test and build trust between counterparties, and is designed to build consensus between the stakeholders within a party.

Trust and consensus- the easier your contracts lead to this result, the quicker and more effective will be your negotiations.

I don’t mean to minimize the risk control aspects of contracts, but in large part, the most important concern to an enterprise is less the nuance of a choice of law provision and more often the iron law of the market- that a company’s fortunes will rise or fall on the relationships it forges with its customers.

As such, I contend that a well-conceived contract negotiation methodology can be an effective sales tool and a competitive advantage to companies that do it well.

Labor Day

He who labors diligently need never despair; for all things are accomplished by diligence and labor. - Menander (342 BC – 291 BC)

In honor of Labor Day, I will be taking a brief vacation from this blog.

For an excellent history of Labor Day, please visit the U.S. Department of Labor’s History of Labor Day webpage, http://www.dol.gov/opa/aboutdol/laborday.htm, which closes by affirming, “The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation’s strength, freedom, and leadership - the American worker.”

Happy Labor Day to all !

Knowledge Management (Part 6)

Mnemosyne (depicted here in a painting by Dante Gabriel Rossetti (1881); courtesy of the Delaware Art Museum, Samuel and Mary R. Bancroft Memorial) is the Greek Goddess of memory. She is also the mother of the nine Muses, implying that memory is the mother of all art. I would contend that memory is also the mother of all business.


Continuing our review from Friday of KM practices:

Wikis- A wiki is a user-editable website designed to promote the accretion of knowledge by individuals contributing content to create a larger whole. At first, I guessed that wikis would be used in the fashion of Wikipedia to create a sort of law encyclopedia, but one other common use of a wiki is as a project management tool, where COP’s can post meeting notes, documents and other content.Wikis have received much public acclaim, but it’s hard to measure what their success metrics are for an internal collaborative website. I would suggest that 100% awareness, 50% usage, with 20% of employees as regular contributors is a good goal.

Law Subscription Service- The concept of a Law Subscription Service is to have a central area on a department’s intranet where attorneys can subscribe to the multitude of free newsletters made available by law firms and other publishers. Each person can tailor their subscription profile to meet their interests. This is an inexpensive and easy way to stay abreast of current developments in a subject area.

Law Calendar- A Law Events Calendar can be used to advertise events of interest to all members of a department, including department meetings, training opportunities, and other events of interest. Again, a simple, yet effective, way to disseminate knowledge assets.

Suggestion Boxes- Suggestion boxes are a common tool, but in my experience are most valuable as a method for changing an organization’s communication structure than for the ideas they generate. Once people know that the ideas submitted to a suggestion box will be treated constructively, then more employees will offer suggestions directly, rather than through the suggestion box. Once employees become comfortable raising their thoughts through other channels, a suggestion box is rendered superfluous.

Publicity- It is important for a KM team to make a concerted effort to publicize its initiatives because (i) good publicity increases team morale, and (ii) good publicity encourages participation in the creation of knowledge management assets.

Collaboration with Outside Vendors- Having attended LegalTech in New York in years past, I was astounded by the plethora of legal technology vendors. What is apparent to me is that the best of these vendors can be important partners in the KM enterprise. Certainly vendors have an economic interest in cultivating relationships with law departments and one should never forget where their ultimate interests lie. That said, a dynamic relationship with a quality vendor can be a win-win situation.

Knowledge management systems have been around since the first stone tablet. What excites me is that today’s technology offers such an impressive extension of the human brain; one that dramatically magnifies human capabilities, just like the invention of the steam engine increased man’s physical abilities. I will continue to build and promote knowledge systems until that magical day when all necessary information is at every person’s fingertips when they want it, how they want it and in the format they want it.

Knowledge Management (Part 5)

Now that we have reviewed the theories of and strategies for implementing knowledge management programs, I want to provide a few real-life knowledge management tools that I have seen work:

Newsletters- Newsletters can be both the flagship of KM efforts and an important outlet for knowledge “assets.” While at Alcatel-Lucent, I edited the LawLink quarterly newsletter for ten issues. Despite my initial fears, not once did I ever lack for enough content. It seems attorneys have a lot of info and insights they like to share, but don’t always have an outlet, so the newsletter provided a much needed media platform. Of course, smaller departments may not have the same need for an internal newsletter, but may want to consider broadening the audience to include internal non-law colleagues as a way to promote greater understanding of the role and value of the law department. One of the more acclaimed features was a “Spotlight On…” column which consisted of interviews of colleagues. In that aspect, a newsletter is as valuable a tool for teambuilding as it is for knowledge sharing.

After Action Reviews- An After Action Review is designed for people to share their first-person experiences and lessons learned in a simple format. The AAR is designed to capture information from people who don’t want to write a “researched” article, but still want to share lessons learned from their experiences. In a variation on the After Action Review concept, colleagues can create a modular training packages based upon an after-action analysis.

Subject Matter Expert “Yellow Pages”- It’s surprising how little employees know about the expertise and experience of their own colleagues. Creating a comprehensive skills/experience directory is a simple step that pays huge dividends in knowledge sharing. Currency is critical for the credibility of directories, so I recommend a regular update schedule.

Communities of Practice-Communities of Practice (COPs) are universally hailed as the “killer application” of Knowledge Management programs. Yet, they are hard to conceptualize. At their core COP’s are based on a simple concept: Learning and Knowledge Sharing are primarily social activities.

Etienne Wegner, a leading theorist in COP’s writes:

Apprenticeship works by being integrated in social participation. Whenever high levels of skills are required-whether we are to become a fluent speaker of a language, a neurosurgeon, a nurse, an X-ray technician, a physicist, or a master mechanic-we organize learning in an apprenticeship-like fashion. The social world, then, is not a distraction, but a rich resource essential to learning. In fact, there is no distinction between learning and social participation, and that is what makes learning possible, enduring, and meaningful.

Whether a COP’s meets monthly, six times a year, quarterly or annually, I have found that this type of information sharing forum is one of the most effective KM initiatives.

Brown Bag Lunches- Lunch seminars are a low-tech way to disseminate information and achieve esprit de corps.

The Virtual Law Library- Maintaining currency in a legal field can be encouraged through a Virtual Library Program (VLP). Under the VLP each participant is given an allowance of up to $200 per annum to purchase a book or subscription related to an area of the law relevant to her/his practice. The quid pro quo for receiving this allowance is that each participating member must (i) create a Knowledge Asset out of the book (e.g.- an article for the newsletter, a summary/digest of the book for the law website, etc.) and (ii) be a consultant on such topic(s) for their colleagues. The goal of the VLP is to foster a learning culture, to provide attorneys with the current research tools needed to perform most effectively, to promote collaborative work habits, and to encourage development of expertise in important areas of the law.

On Monday, we will conclude the Knowledge Management series by profiling some additional KM practices.

Knowledge Management (Part 4)

Continuing our theme from Friday’s post, here are some additional strategies for implementing knowledge management initiatives:

6) Lower the Barriers for Creation and Submission of KM “Assets”- Employees have an astounding amount of information and knowledge to share but often are reluctant to do so because they feel that the information must be “perfect” or “complete.” Therefore, a good KM program needs to have multiple avenues of cataloging information regardless of its format. For instance, those who prefer formal legal writing can prepare articles for a department newsletter, while those who lean toward a more informal approach can submit material in an after-action review format that allows for a first-person narrative of experience. For tidbits of information that require context- a wiki can be useful, while for small items that don’t require much context, something simpler, such as an email alert, can be useful.

The key is to provide many avenues for the information to be converted to some sort of shareable format.

7) Encourage Many to Give a Little, so the Whole Gets a Lot- Metcalfe’s law states that the value of a network increases proportionally to the number of users. Similarly, the KM “network” will increase in value as more people participate, even if any given individual’s participation is relatively small. This rule is a corollary to the concept of lowering the knowledge creation barriers and emphasizes the social good that will occur if each person contributes even a small number of knowledge assets.

8) Focus on High-Relevance Efforts- There is no value in a project that does not offer real and tangible value for users. The value of a project cannot always be determined beforehand, so if a project appears to have missed the mark on usefulness, just stop it.

9) Be Inclusive- A successful KM program must include all levels of staff in a given organization. Some of the most important ideas can be created, fostered and developed by administrative staff. Remember the maxim, that “Every person is my superior, in that I may learn from them.”

10) Set clear goals, both general and specific- In the first flush of enthusiasm for KM projects, it is easy to become over-extended. Make sure that you keep the number and type of projects manageable and that each project contributes to your overall mission.

In next Friday’s post, we’ll explore how these ideas can be reduced to practice.

Knowledge Management (Part 3)

Today’s post will delve into the specific techniques that I have used in building an effective knowledge management program. Every law department is different and not all these methods scale for all size law departments. In a three-person, co-located department, the best KM program may be to have robust lunch time discussions. But whatever the size and type of your law department, the goal of a KM initiative is the same: To create a knowledge sharing system that maximizes the resources available within the department to enable team members to provide quick, insightful, and meaningful advice to clients. Here are some approaches that can help achieve that aim:

1) Benchmark yourself. The first step is to mine your organization’s past for lessons and seek advice from others who have traveled the KM road. At the beginning of many KM initiatives, you may well discover that you are not really at the beginning. In fact, most organizations have made some inchoate attempts to capture and disseminate relevant knowledge. These efforts may take the form of intranet sites, bulletin boards, interactive legal advice applications, form libraries, document repositories, and on-line policies. Chances are also that these projects will be like the sand-swept pyramids, impressive monuments of limited utility.

Many companies develop some form of KM practice, often an ad hoc response to perceived bottlenecks, sometimes under the guise of an efficiency or quality program, but organizations rarely follow through with a holistic, systematic approach.

So, meet with colleagues who have been involved in your company’s earlier KM projects and run a KM Workshop to solicit additional ideas and feedback from colleagues.

2) Benchmark others. Visit other companies and organizations dedicated to applying KM and related technologies to the practice of law. I find that law departments are usually justifiably proud of their knowledge management efforts and are more than happy to offer pointers to interested parties.

3) Enlist Executive Support Early, With the day-to-day crush of duties faced by the average employee, it is hard to get buy-in of the rank-and-file workers without explicit direction or encouragement from senior management. This is especially true of a KM program that by definition requires interactive, not passive, participation from a substantial number of employees. As such you must (i) keep senior management closely informed of your intended goals and outcomes; (ii) find a supportive executive sponsor; and (iii) lobby for and include specific KM requirements in every law employee’s annual goals and objectives.

The individual goal requirement should be drafted both to capture a general support requirement and a specific output requirement (e.g. the creation of at least one knowledge asset) while still allowing the employee broad flexibility in achieving that goal.

Ideally one can impose a direct connection between participation in KM efforts and bonuses, but even without this carrot, KM participation can be a consideration in relative ranking and rating, and thus, participation in KM efforts can correlate in some way with compensation. Some companies make more explicit the connection between participation in these initiatives and a bonus. I know of one firm that earmarks 5% of each person’s annual bonus to their KM participation.

4) Rotation of Duties is Critically Important. Nearly as important as executive sponsorship is finding a cadre of dedicated leaders who will help drive discrete initiatives to a successful conclusion. There is a danger of overloading this set of employees with “extra” work and having the KM work fall by the wayside. To combat this, I recommend the practice of limiting leadership of KM projects to a defined term of six to twelve months, depending on the project. This approach:

-Lessens the likelihood that people will burn out ;
-Maximizes the enthusiasm of project leaders;
-Ensures the flow of new ideas ; and,
-Instills a healthy level of competition into how project leaders approach their tasks.

5) At the Outset, a Focus on Social Networking is Recommended. Literature suggests that 80% of knowledge sharing is done through informal social networking. As such, a good start can be had through low cost, high impact augmentation of social networking devices. A corollary to this rule is “don’t fall in love with the technology.” Technology is a tool, but not usually an end in itself. The landscape is littered with remnants of nifty technologies that didn’t resonate with employee needs.

More strategies for implementing KM initiatives will follow in my next post.

Knowledge Management (Part 2)

Thanks to the internet, it won’t be long before most, or all, of the world’s explicit knowledge will be at our fingertips. But the mere presence of information does not necessarily impart knowledge. For example, if all the world’s understanding on how to play the violin were reduced to a two-volume set, would reading it bring you any closer to making a harmonious sound? Would you want your surgeon to have imbibed every technical piece of data about your appendix, but never to have actually performed an appendectomy? Certainly not. And that is because true craftsmanship is not simply the ability to find information, but rather the practical application of that knowledge. And the world pays a premium for those who can reduce theory to practice.

One fundamental precept of Knowledge Management is that there is a distinction to be made between explicit knowledge (objective, rules-based, easily captured) and tacit knowledge (subjective judgment, insights, experience, rules of thumb, technique). It is exceedingly difficult to systematically capture tacit knowledge, so an effective KM program must create effective channels to access this tacit know-how.

All too often KM initiatives go astray by failing to understand the explicit/tacit distinction. Corporate portals and databases are built and then filled beyond capacity with data of every description. Due to the overload of information, and the difficulty of maintaining currency, and the complexity of searching huge databases, this type of data junkyard lacks the context that allows use of the data to actually make a decision.

It is the combination of explicit and tacit knowledge that leads to the end goal of all KM programs: Information in context to produce an actionable understanding.

With this in mind, a law department can undertake initiatives designed to enhance knowledge sharing habits and add appropriate tools to:

· Foster a culture of knowledge sharing;

· Provide easy access to tools for the creation, sharing and using of information;

· Allow high quality work to be achieved in less time;

· Impart a greater sense of professional value.

Upcoming posts will explore specific methods to achieve these aims.

In the previous post, we imagined a fictional individual who had to relearn his life on a daily basis. On the other end of the spectrum, Issac Asimov wrote of a fictional race of aliens who had the capacity to share experience across each other’s minds, so that a learning by one would be immediately understood by all. Perhaps such a complete state of knowledge sharing is only in the realm of science fiction, yet it is a goal for which any law department can strive.

Knowledge Management (Part 1)

Here in South Carolina, it’s back to school time. All the teaching and learning that’s about to go on in the school inspired me to think about how to develop a teaching and learning law department. As such, I thought I’d make the next few posts about a related subject: knowledge management and its application to lawyers.

First off, what is Knowledge Management?

Imagine waking up one day and having to re-learn how you commute to work, where you left your car keys, and even how to drive. Now imagine having to relive that experience day after day after day. You may think such a scenario is merely fodder for movies or old episodes of the “Twilight Zone, and yet countless corporations are living with this situation as precious institutional memory is routinely discarded, forgotten, misfiled, and otherwise lost.

It’s easy to lump KM initiatives as another management fad of the month. Such a characterization would be wrong. Managing knowledge is fundamental for business success and confers a competitive advantage on those organizations that do it best. This is especially true for corporate lawyers, whose stock in trade is knowledge, wisdom and judgment.

An effective KM program involves many complex organizational issues; merely building elaborate technology tools is not sufficient; instead knowledge sharing must be woven into the daily habits of the corporation. In fact, KM literature suggests that as much as 80% of knowledge sharing is done through social networks.

Origins of KM Theory

While the aggregation, cataloging and distribution of knowledge dates back to time immemorial, “Knowledge Management” as a business discipline was founded by Karl-Erik Sveiby. Sveiby, an accountant by trade, was troubled that traditional balance sheets did not adequately take into account the vast amount of intangible assets, such as knowledge and business contacts, that were integral to business success. In 1986, Sveiby co-authored The Invisible Balance Sheet a book that popularized the idea of KM. As developed nations evolved from manufacturing-based to services-based economies, the focus on intangible assets accelerated.

Sveiby developed a three-part framework for assessing intangible assets; Employee Competence, Internal Structure and External Structure. Employee Competence is defined as the capabilities and skills of the people in an organization. Internal Structure is the patents, processes, information flows, vision, strategy, policies and communication habits of a company. External Structure is the value of the relationships with those entities with whom you do business.

On the next post, I’ll continue this discussion of KM theory.

Setting Goals

Setting goals, whether in your professional or personal life, can be a tricky task. By definition, most goals define something that you lack (e.g. I want to get in good shape, I want to have a million dollars, I want to attain a 50% market share) and I worry that when focusing on what one is not, a person may miss out on opportunities arising from what one is. Furthermore, it’s easy to become goal-bound, which is to say, so obsessed with a particular vision of the future that one loses perspective on other present opportunities.

Goal-setting advisors recommend so-called SMART goals (Specific, Measurable, Attainable, Results-oriented and Time-bound). This approach certainly makes sense for certain types of goals, but also seems a bit mechanistic. Between the setting of a goal and its attainment, one can be certain that changes will intervene. This theme was recently explored by David Brooks of the New York Times in his article "The Summoned Self" (http://www.nytimes.com/2010/08/03/opinion/03brooks.html?_r=1&scp=1&sq=the%20summoned%20self&st=cse ).

In his column, Mr. Brooks contrasts the “Well-Planned Life” with the “Summoned Life,” which he describes as:

This mode of thinking [the “Summoned Life”] starts from an entirely different perspective. Life isn’t a project to be completed; it is an unknowable landscape to be explored. A 24-year-old can’t sit down and define the purpose of life in the manner of a school exercise because she is not yet deep enough into the landscape to know herself or her purpose. That young person — or any person — can’t see into the future to know what wars, loves, diseases and chances may loom. She may know concepts, like parenthood or old age, but she doesn’t really understand their meanings until she is engaged in them.

Moreover, people who think in this mode are skeptical that business models can be applied to other realms of life. Business is about making choices that maximize utility. But the most important features of the human landscape are commitments that precede choice — commitments to family, nation, faith or some cause. These commitments defy the logic of cost and benefit, investment and return.

The person leading the Well-Planned Life emphasizes individual agency, and asks, What should I do?” The person leading the Summoned Life emphasizes the context, and asks, “What are my circumstances asking me to do?”

In the Summoned Life, values rather than specific goals act as the polestar to guide one’s actions. I would suggest that melding Summoned Life values with meaningful, yet adaptable goals from the Well-Planned Life yields a powerful combination.

The purpose of a goal is to allow a person to figure out what to do next to make the most beneficial use of one's time, energy and attention. How do we identify what to do in the face of an unknowable future, rapidly changing circumstances, and ambiguous conditions? Perhaps we listen to the advice of Jose Raul Capablanca, the early 20th century international chess champion, who, when asked how many chess moves ahead he looked while playing a game, responded: "Only one, but it's always the right one."

On Charleston

Travel and Leisure magazine has just ranked the top “Most Romantic” cities in the US, with Charleston coming in at # 2, http://www.travelandleisure.com/articles/americas-most-romantic-cities/3. The magazine cites the city’s rich history and Southern charm.

I’d also point out Charleston’s uniquely changing, yet resilient character. The resilience has been necessitated by events such as British occupation during the Revolutionary War, the tempestuous events leading to succession from the US in 1860, a shattering siege during the Civil War, a destructive earthquake in 1886, and the occasional hurricane. But each blow has bounced off the fair City, much like the British cannonballs bounced off the palmetto log walls of Fort Moultrie when the King’s army first tried to take Charleston in June, 1776. (This victory led to the Palmetto being named the official state tree.)

With each challenge, the City has adapted.

As the surrounding marshes change with the tides, and the weather with the seasons, so too the city has changed with society (albeit not always willingly) and reinvented itself at each turn, while preserving its historic personality.

A common sight in town is the South Carolina Palmetto Flag. The symbols on the flag so well capture the special essence of Charleston. The ever-changing moon represents the adaptable nature of the city and the palmetto tree stands for its resilient sturdiness.

The resulting combination is a modern city with a traditional heart. Who wouldn’t fall in love with that?

Simplicity

“Think simple,” as my old master used to say- meaning reduce the whole of its parts into the simplest terms, getting back to first principles. - Frank Lloyd Wright

It’s a constant battle to achieve simplicity. Complex organizations have a tendency to over-complicate matters. I think we in the legal profession, analytical by nature, are often the culprits. We become enamored of fiendishly clever arguments (e.g. Section 4 read in conjunction with Section 5(j) and buttressed by the language in Section 17 (b)(iii) clearly vindicates my client’s position), but in my experience, having fewer dots that need to be connected make a more compelling narrative. And whether the task is to convince a judge, a juror, a business counterpart, or the CEO, success is all about creating a forceful narrative.

Life will impose its own complications, so our job is to distill critical information to its clearest essence. I tell my team to make things as simple as possible, and then find a way to make them simpler still.

A Practice Transformed

At the close of my last semester in law school, Professor Gary Gilden said that he hoped that we would be able to come back to him at our 20th reunion and be able to say that lawyers can be human beings too. At the time, I thought that was a curious remark because, of course lawyers are human beings- why would anyone think otherwise?

After practicing for several years, I started to understand his point. The practice of law can in certain respects be alienating. Maybe that’s the dark side of the “back stage pass” metaphor from a few posts ago. The practice of law can breed an “otherness” that can create barriers to communication; the law’s analytical approach can lead one to lose touch with the richness of human emotion and even with one’s own personal feelings; and there is also a frequently adversarial and disputatious aspect to the profession. Plus, while the law is a necessary handmaiden to business, lawyers are often cast in a supporting role and not primary players. All this can lead to malaise about law as a career.

An antidote for this perspective can be found in Steven Keeva’s book, Transforming Practices: Finding Joy and Satisfaction in the Legal Life. I read this book shortly after it was published ten years ago, and it re-energized my legal career by emphasizing that law can be a helping profession. Keeva makes the point that making your livelihood in law can be quite satisfying when you build a practice around your inner values. If there is one book that I would recommend to all those hearty souls across the US who just completed their bar examinations this week, it would be Transforming Practices.

So, to Professor Gilden I tender my thanks for posing the question and I offer my answer some 20+ years in the making; that although it may take a little extra effort, even lawyers can be human beings too.

Colleagues vs. Clients

I was reminded after last Friday’s post that another distinction between inside counsel and private practice is that for in-house counsel your clients are your co-workers. That may seem like an obvious distinction, but it makes a crucial difference in how legal advice is provided and received.

A few years ago, I attended a Practicing Law Institute seminar in NYC where Ben Heineman, former general counsel of GE, spoke about how he encouraged his law department to refer to their business partners as colleagues rather than clients. I think that’s a great idea because it reminds that both counsel and colleagues are in the same boat and need to be rowing in the same direction. Using the word “colleague” avoids the sense of otherness that the word “client” imparts.

Yes, in-house counsel do have certain ethical and professional obligations that can go beyond the corporate work relationship, and yes, I do sometimes use the word “client” with my team to remind them that we are performing a service function, but I like the distinction that Heineman makes.

This is a variation on what I sometimes refer to as the “pronoun problem.” On more than one occasion, I have seen a junior attorney tell a colleague, “you have a problem that you will need to fix” when it should nearly always be “we have a problem that I can help you fix.” All members of a business enterprise, lawyers and non-lawyers alike, share an identity of interest. Using the word “colleague” neatly captures this idea.

Inside and Out

To a casual observer, the role of in-house counsel and outside counsel may seem identical. Both provide legal advice to an entity, one on an ad hoc basis, while the other is employed full-time. This perspective, however, misses the very real qualitative differences in the roles. Lawyers often don’t appreciate that inside counsel approach problems in a fundamentally different way than outside counsel. This disconnect is, in my opinion, one of the primary causes of dissatisfaction with outside counsel.

Cost vs. revenue- In a firm, the lawyers are the revenue generators; their value add, whether measured in billed hours or clients retained, is the raison d’être for their entire enterprise and the infrastructure of their business is built to support their efforts to achieve this value. Inside law departments, however, are cost centers, and don’t usually have the same support systems. As such, in-house counsel must approach their role with a mindset that puts a premium on economy, efficiency and ingenuity. Yes, I know that inside counsel can generate all sorts of metrics to impute dollar values and returns on investment and that they often do drive revenue (as least in a supporting role); but the simple fact is law departments must continually justify their value rather than having it taken for granted. Personally, I view this burden as a blessing because it forces law departments to be more creative in developing service delivery models.

Proactive vs. reactive- Outside counsel typically is made aware of an issue only after it has ripened enough for the client to believe it merits legal attention. In many cases, the issue will be over-ripe or even rotted. The best part of working as inside counsel is that the deep intimacy with the business allows us to see around corners and to head off issues before they become big problems. It is imperative that inside counsel cultivate this proactive mindset, otherwise the corporation might as well save the salary costs and simply engage outside counsel on an as needed basis.

Deciding vs. opining- While outside counsel can make handsome livings offering opinions, inside counsel must translate those opinions into decisions. While opinions can be nuanced and multifaceted, decisions are usually rather binary. To the extent that outside counsel can assist with the deciding process, as opposed to the informing/opining process, their value to in-house counsel will grow immeasurably.

Generalists vs. specialists- The old saw has it that a generalist knows less and less about more and more until they eventually know nothing, while the specialist knows more and more about less and less until they eventually know nothing. In-house lawyers tend to be on the generalist side of that equation, so must be highly attuned to when they should reach out to the specialists.

I’d be curious to know if any readers see other distinctions between private practice and in-house law.

Moonglow

It's a brilliant surface in that sunlight. The horizon seems quite close to you because the curvature is so much more pronounced than here on earth. It's an interesting place to be. I recommend it. – Neil Armstrong

Forty-one years ago tonight, my parents woke me up just before 11 pm and I followed them downstairs to our back porch on a humid summer night to watch Neil Armstrong set foot on the moon’s surface. Being six and half-asleep, I didn’t fully appreciate the significance of the moment at the time, but now am thankful that I was able to see one of the crowning achievements of the modern era. It seems a shame that nothing in the last four decades has been able to capture the public imagination in the same way. Is our society too risk averse or politically fractious to make such an effort today? I hope not.

While no manned space flight has reached the moon since 1972, the law has made its attempt to visit. In 1979, the United Nations Office for Outer Space Affairs promulgated the Agreement Governing the Activities of States on the Moon and Other Celestial Bodies, also known as the Moon Treaty. This treaty states that the moon should be used for the benefit of all states and purports to prevent altering the environment of celestial bodies or claiming ownership over any territory of celestial bodies, and further requires that any mining or other resource extraction be made by an international organization.

Despite its lofty aims, the treaty has remained rather earthbound because no nation that actually has a spaceflight program has ratified it. For some reason, I think that’s a good thing.

Hiring Outside Counsel

I’ve been asked by my team when I recommend for us to engage outside counsel. I have a bias to handle as much as possible with our in-house staff. That said, there are times when the novelty, complexity or importance of an issue merits engaging special expertise. As a general rule of thumb, I will engage outside counsel when we need certain skills, scale, access or coverage that the in-house department can’t supply.

Skill- While I cultivate attorneys who are experts in certain areas of the law, no law department, certainly not a small one, can be expert in all areas. Just as with medical specialists, so it is with lawyers, sometimes you simply need a world class opinion on an unfamiliar topic. Keep these experts in your Rolodex (do I date myself? perhaps your email list), their knowledge is worth the cost.

Scale- We also reach out for outside counsel to ease resource constraints during peak demand periods. This resource smoothing can be achieved through a combination of paralegals, temps, contract attorneys, and the occasional secondment. But there are times when, as Stalin said, “quantity has a quality all its own,” and you will need to hire a firm that has enough personpower to send squadrons of resources “over the top,” perhaps in response to a regulatory audit, a civil investigation or a sizable litigation.

Access-Sometimes you need to pay for “access.” By that I mean you may have a need to hire the former Attorney General or other influential figure when you categorically need to be taken seriously by whatever constituency you need to persuade.

Coverage- Outside counsel can adopt an independent view that can make unpopular decisions more palatable and also can offer an ostensibly neutral sounding board against which to test new ideas. This is a valuable role that often cannot be performed by in-house staff who may be caught up in the context of company culture.

I’d be curious if readers have any other criteria for when to hire outside counsel.

On Litigation

When it comes to litigation, I subscribe to Voltaire’s point of view when he wrote, “I have never been ruined but twice in my life- once when I was in a lawsuit and lost, and once when I was in a lawsuit and won.”

Despite the intoxicating rush of seeing your legal theories vindicated in open court, I’ve seen too many Pyrrhic legal victories and inconclusive resolutions to think of litigation as anything other than a last resort. Court proceedings are essentially bureaucratic dispute resolution mechanisms, and often inefficient ones at that. I say this with all due respect and admiration for the judiciary, and I acknowledge the importance to society of having dispositive tribunals adjudicate disputes in a procedurally unbiased manner. In the vast majority of cases, however, litigation entangles the participants in an expensive and lengthy journey that often leads to an unsatisfying end. No better example of the futile drone of litigation exists than the fictional Jarndyce case of Bleak House fame:

Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce without knowing how or why; whole families have inherited legendary hatreds with the suit. The little plaintiff or defendant who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled has grown up, possessed himself of a real horse, and trotted away into the other world. Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; there are not three Jarndyces left upon the earth perhaps since old Tom Jarndyce in despair blew his brains out at a coffee-house in Chancery Lane; but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.- Charles Dickens, Bleak House, 1852

On the other hand, there is the view (apologies to von Clausewitz) that litigation is business carried on by other means. This can be a valid approach, if followed with some analytical rigor; this strategy largely relies upon leveraging the process of litigation rather than seeking a vindicating result- a sort of judo-like approach to use against an opponent in furtherance of a business strategy. This tactic may be effective at times, particularly when used by clients who are sophisticated consumers of legal services (see post of June 19, 2010), but considering the transaction costs associated with litigation, it should only be used sparingly. I’d much rather spend the corporate treasure, borrowing another phrase from Voltaire, to “cultivate our own [company] garden.”

Saying No

I read that a CEO, when asked what the toughest part of his job was, responded, “saying no to close friends.” Saying “no” can be one of the more difficult things to do in life generally, but it is fundamentally critical to success for in-house attorneys. Conversely, no law division wants to be known as the “Department of No.” This dynamic requires lawyers to learn to say no in as constructive a fashion as possible.

I always say that we don’t owe clients or customers agreement with what they are saying, but we do owe them an explanation and an exploration of alternatives. Along the same lines, Steve Reynolds, General Counsel of Alcatel-Lucent, fashioned a mantra of “no… because… but” for his law department. By that he meant if one must say “no” to a particular idea, one should explain the “because” behind the “no,” and then add “but have you considered this alternative...” To me this is an exemplary approach.

Too many promiscuous “yes’s” can lead to a different sort of trouble. If a client, customer, vendor, or peer does get a “yes” from you on a meaningful issue, they should feel like they earned something of value and it should not be given too cheaply.

Most difficult of all, is to say “no” to yourself; but those no’s can be the most important of all, particularly when arranging your priorities. It’s as tempting for individuals as it is for corporations to put everything on a master “to do” list, but your “to don’t” list is just as crucial. You will be filled with many great ideas on how to change your department, your company and even the world, but your energies will be too diffuse without ruthless prioritization.