Law Day

May 1 is Law Day. First proclaimed by President Eisenhower in 1958, Law Day was originally intended as a counterpoint to International Labor Day celebrations, which were seen as communist. In announcing the first Law Day, Eisenhower said, “In a very real sense, the world no longer has a choice between force and law. If civilization is to survive it must choose the rule of law.” This noble sentiment still rings true today and reminds us to reflect on the role of law in the United States and to acknowledge its importance to a well-ordered society.

I’ve been writing this blog for a year and I appreciate the opportunity to be involved in the “great conversation” about our profession. I’ve met quite a few folks through writing this General Counsel Diary, and while it hasn’t climbed the ladder of most-read blogs in the US, I am always surprised by the number of folks who have seen one or more of the posts.

I’ve tried to chronicle issues of concern to in-house counsel and to explain the value that in-house counsel provides, a value that accounts for the ascendancy of the corporate counsel role over the last twenty years.

I will be taking a brief break from this blog to attend to some other projects. In the meantime, I wish all readers and supporters well. May you be inspired by life with every breath you take, and may every exhalation be a prayer of gratitude.

Omnibus

As I approach the year anniversary of this blog, I had a few miscellaneous thoughts I wanted to collect.

Fundamentally, a good practice of law is all about project management. If you ask clients about what they like about their attorneys, it will more likely be responsiveness, communication skills, delivering on time and on budget with few surprises, anticipating events and managing expectations. All project management skills. It’s the rare client who cares or even knows about the nuances of, say, drafting an indemnification clause.

I’d love to see a day when contracts are more like constitutions or charters, rather than exhaustive reviews of every conceivable risk that could occur.

Law is a very versatile career choice, but I believe that law schools often do their degree a disservice by encouraging law firms as a primary career path. Frankly, a law degree is valuable even without ever practicing because it teaches analytical skills, how to review and draft agreements, how to advocate, how laws are made and interpreted, public policy, etc.

I’d like to see cognitive neuroscience and law joined in some way. I’d bet that would tell us a lot about how to negotiate settlements and write contracts.

In the in-house setting, law departments may have to “beg, borrow, and steal” human resources, but that is not a bad thing. The way I see it, everyone in the company is a member of the law department (in that they have a role to play in compliance and risk management), but they just don’t know it yet.

Managing outside counsel fees take up a lot of space in trade magazines for corporate counsel, but isn’t the issue really as simple as effectively communicating your budget expectations and managing to them?

Don’t be afraid to entrust your paralegals and administrative staff with tasks that may be outside of their traditional duties. My experience is that people will invariably rise to the occasion, if given proper direction.

Working with partners and resellers requires a different sort of relationship than with a direct sales force. Sort of akin to the difference between friends and family. But if your company has good “friendship” skills (e.g. good communication, respect for boundaries, tolerance for differences), then partnership arrangements can be a tremendous force multiplier.

It’s natural for start-ups to want to protect their intellectual property assets, but in most cases the brand/market related IP will be of superior value to the patent related IP. Patents can drain a start-up’s initial resources, so proceed with caution.

I’ve heard it said that the law is what is boldly asserted and plausibly maintained. Or is that politics?

In mergers, I’ve found that the most critical “cultural” issues are the ones that revolve around how decisions are made, who is included in decision making, what level of information is required to make a decision, and how decisions are communicated. Much of the rest of the “cultural” issues are aesthetics or temperament.

Email is a great tool, but too often gives the illusion of productivity instead of the reality.

Multi-tasking is a dangerous trap. Some jobs can readily be multi-tasked, but many tasks require a degree of attention and focus that leads to diminishing or even negative returns when you include them in a multi-tasking environment. It’s the old maxim, if you don’t have the time to do it right the first time, how will you find the time to make it right. As such, be intentional about what you choose to multi-task.

I liked my time in law firms after law school. I view it as a sort of necessary apprenticeship. But I get true joy working in an in-house environment. To me, law and business management are the two wings of an airplane. Both are needed to lift the enterprise off the ground.

The Learning Law Department

I've written about the importance of having a "teaching" law department, but equally necessary is the development of a "learning" law department. By that I mean a team that is open-minded enough to seek lessons and ideas from everyone.

A few years ago, a rather retiring colleague came to my office, and made a very good case why our intended course of action was wrong-headed. The planned action was entirely my idea, so he was concerned that I might take offense. In fact, I deeply appreciated being told how and why we were going off course. Too often management of a team becomes a monologue, but I strive to build teams where dialogue reigns.

When the excitement of a goal or an idea transcends egos, that's when a learning enterprise is born.

This process starts in the quote from Thomas Carlyle, "Every man is my superior in that I may learn from him." Every day I go to work, I learn something new from my colleagues, and I hope that, on occasion, they might even learn something from me.

Your Lucky Day

Sorry not to have posted in February. It was a short month with many demands. The groundhog made his annual appearance, then went back into his den. Maybe I followed his lead and was hibernating too.

Anyone, I've been reading a slew of business books and it strikes me that one of the failings of most of these efforts is the failure to recognize the role that luck plays in an enterprise’s success or failure. But in most fields, be it business, the military, sports or otherwise, chance has been known to play a crucial role.

Perhaps this omission is because to acknowledge luck might seem anti-rational or fatalistic. After all, if fortune can be capricious, what use is planning and goal setting? What use is writing a book of business advice?

I would suggest, however, that acknowledging the forces outside our control emphasizes the need for diligent effort and flexible planning. Expecting the unexpected, developing contingencies, and having ready-made Plan B’s, all provide a competitive edge.

Acknowledging the role that fortune plays keeps you humble and vigilant when you are experiencing success, because you know that your luck will change. Understanding the presence of providence allows you to persevere in difficult times, also knowing that your luck will change.

My Daily Poison

No one likes to do unpleasant tasks. What constitutes an unpleasant task may vary from person to person, but we all encounter disagreeable items on our to do list. It’s tempting to try to avoid these unlikable jobs, but the more we delay, often the worse they get. One good strategy I’ve read about is to “eat the frog” first thing in your day. That is to say, do the most difficult task early on and the rest of the day will be easy by comparison.

So I have embarked on this frog-eating plan and will advise how it turns out. So far, most of the unpleasant tasks have not been so bad after all, and in any case they are done. Also, dealing with the difficult actually makes subsequent difficult tasks easier. Sort of like King Mithridates, who sampled a little bit of poison each day, so as to build up an immunity to concoctions that might be slipped into his meals by his enemies. His plan worked, and was immortalized in A.E. Housman's 1896 Book of Poems, A Shropshire Lad:

There was a king reigned in the East:
There, when kings will sit to feast,
They get their fill before they think
With poisoned meat and poisoned drink.
He gathered all the springs to birth
From the many-venomed earth;
First a little, thence to more,
He sampled all her killing store;
And easy, smiling, seasoned sound,
Sate the king when healths went round.
They put arsenic in his meat
And stared aghast to watch him eat;
They poured strychnine in his cup
And shook to see him drink it up:
They shook, they stared as white’s their shirt:
Them it was their poison hurt.
—I tell the tale that I heard told.
Mithridates, he died old.

Connections

Last week, I read Outliers by Malcolm Gladwell which is an entertaining and thought provoking effort that purports to analyze who, how and why success is achieved. It best works as a reminder that achievements are not always the result of overwhelming merit, but rather a mixture of talent with healthy doses of luck and circumstance. For example, the correlation of professional hockey players in Canada to early year birthdates (the Canadian hockey school league cut-off date is January 1 and Gladwell’s thesis is that older kids are bigger/more mature and thus receive disproportionate benefits such as better opportunities to play and additional coaching), although not a huge revelation to parents of elementary school age children, is eye-opening as to the extent of the “birthday” effect on youth athletic league opportunities. As the book progresses, however, the insights and conclusions become more attenuated. I remain unconvinced that China’s rice-based economy fully explains the sweep of Chinese culture from ancient times to today. There are many times where I thought the book fell into the logical trap of ex post facto, ergo propter hoc (after this, therefore because of this). Books like Outliers, and Freakonomics by Steven Levitt fall into the recent wave of pop sociology/economics books, and are entertaining to read, but may do no better matching correlations to causation than the rest of us. We know that correlation does not necessarily mean causation, but I would offer that causation does not necessarily mean correlation. By that I mean that many events are the result of a convergence of happenings and non-happenings that are very hard to discern and often unique. This is not to say that the effort to find underlying causes is not worth undertaking. Many of the advances of civilization have come from recognizing and exploiting patterns of causation. It’s just that the connections we find may not be the ones we expect.

All I'm saying is simply this, that all life is interrelated, that somehow we're caught in an inescapable network of mutuality tied in a single garment of destiny. Whatever affects one directly affects all indirectly. For some strange reason, I can never be what I ought to be until you are what you ought to be. You can never be what you ought to be until I am what I ought to be. This is the interrelated structure of reality. –Dr. Martin Luther King, Jr.

When to Call Your Lawyer

I had the opportunity to present some training sessions on "Working with the Law Department" to some of our sales teams last week. A frequent question was when to involve the Law Department in deals. I would recommend bringing the lawyers in as early as possible, in fact, even before they are needed. What I like to do is to contact the counterparty's counsel prior to documents being exchanged, just to explain the deal and to explain our approach to our business. There is an uncanny correlation between the occurrence of these calls and quicker negotiations.

As I have mentioned in an earlier post, contract negotiations are all about trust- if you build the trust before negotiations start in earnest, the contract negotiation cycle will be shortened. Plus, the other party will often avoid taking a "by the book" approach to document drafting when they understand the context of the deal better.

As I said to the group, "If you do a little bit of law, I'll do a little bit of sales..."

Our Digital World- Email

As we start the New Year, I have developed a couple of work-related resolutions. The first is the continuation of a long-standing resolution to focus on the truly important tasks and not be fooled by urgent or semi-urgent items that masquerade as important. By important, I mean meaningful tasks of lasting value.

The truth is that no matter how long you work or how hard you try, some things will be left undone. Make sure that your undone list has as few important items and as many unimportant items as possible. We focus on our to-do lists, but this year, I plan to focus as much on my not-to-do list.

This year, I also plan to continue my long-standing assault on email. Statistics I’ve read estimate the number of emails sent per day (in 2009) to be around 247 billion. Even granting that 80% of this traffic is spam, that’s an astounding number.

Of course, email can be a great tool, but emails are not always the best medium for dealing with complicated questions. To me, the telephone is much better for providing a richer dialogue and usually a quicker result.

Moreover, as a lawyer, I have seen how emails can compromise the security of an organization, create a bad record and lead to unfortunate misunderstandings. This doesn’t even take into account the many emails that require reading through long email chains to figure out what is going on. I feel like an archaeologist digging through layers of soil to reach the meaning of some emails; and sometimes like the movie Memento, emails are presented in some convoluted backward chronology.

So I offer five starter rules for using email, don’t use emails to air controversies, don’t write what you wouldn’t say to someone’s face, be descriptive in the subject line, keep your writing appropriately short (even terse) and use caution in replying to all.

May all your 2011 resolutions be successful.

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.