Legal operations: Difference between revisions

[[File:Twiki.png|450px|thumb|center|Inhouse legal of the future, yesterday.]]}}{{d|Legal operations|/ˈliːgəl/ /ˌɒpəˈreɪʃənz/|n}}<br>Recursive rent-extraction ''from the consummate rentiers''.

So, let me tell you a story.

After all, work needed to be done, and it was the lawyers who would usually do the hard yards, churning out thousands of pages of [[verbiage]], running down every quixotic idea, accommodating every spurious risk factor, war-gaming every nightmare market that the issuer’s finance director could confect. The lawyers regularly worked through the night to meet an artificial deadline imposed by a junior analyst who, when it was met, would ignore the proffered draft for a couple of days before advising, without remorse, that he’d forgotten to mention the deal changed Thursday last, and the draft, knocked up in lieu of a long-planned anniversary dinner, hadn’t been needed in the first place.   

Forged of these fires was the [[Magic circle law firm|magic circle]], a concept which has been with us since at least the time of the [[First Men]] and, yea, even unto the primordial pagan era before them when [[Children of the Forest]] roamed the [[Bretton Woods|Woods of Bretton]].   

Now management orthodoxy has understood for decades that it isn’t [[Cost - waste article|cost]] by itself, but [[waste|wasteful cost]], that is the problem in a distributed manufacturing process: raw materials ''do'' cost money. You ''do'' have to pay machine operators. You can’t avoid the basic minimum costs of doing something properly. Rather, you rigorously test your processes to check you ''are'' doing it properly — and not ''over''doing it by wasting materials, over-engineering, having your staff standing idle or engaging them in unnecessary activity. This was Toyota’s profound insight: through sheer analytical rigour in [[Toyota Production System|eliminating waste from its manufacturing process]] in the 1950s and 1960s, it beat the American auto-manufacturers to a pulp.

Now the thing about costs and waste is that they are not some kind of astral yin and yang, orbiting each other in a sort of stable zero-sum relationship. Some costs are worth it; some are not. Some costs are obvious; some are hard to see.  

The easiest costs to see are ''salaries''. Salaries are big, lumpy and easily stopped: you simply dispense with those to whom you are paying them. This has passed for sport amongst finance executives for many years.

Silly questions distracts not just those who ask them, but those to whom they are addressed: all who are hindered from doing more productive things. Hare-brained notions skitter around the skirting-boards of all organisations, out of sight, unchecked, by their nature creating ''more'' stupid questions and bad ideas, starting off little chain reactions of stupidity and waste. If not answered quickly and clearly, these chains sometimes ossify into policies, procedures, work-streams, teams and even [[Human resources|whole departments]].  

But when the costs are so big, it is really hard not to obsess about them, in the round, as a thing in themselves. Especially if you are an accountant, and you don’t understand the product or the manufacturing process anyway. “I ''know'',” the benighted business analyst will complain, “that cost isn’t important. But the CFO wants to see a five percent reduction. Every year.”

One last digression: Toyota’s [[lean production management]] technique works best in “tame” environments where all dependencies are mapped and all possible outcomes known. Where your environment is “[[Wicked problem|wicked]]” — imperfect data, non-linear interactions, [[Convexity|convex]] risks — you need three things that are generally designed ''out'' of tame production lines: [[Subject matter expert|expertise]], [[autonomy]], and [[redundancy]].

*'''We over-engineer legal documents''': Partly because any [[Professional advisers|professional adviser]] is short an ugly option should anything go wrong, and partly because all [[rent-seeker]]<nowiki/>s tend towards [[Iatrogenic|iatrogenesis]], legal documents are absurdly over-engineered. They are far too incomprehensible, inscrutable and, even for those who do understand them, they are shot through with overblown protections the parties do not need and will never use, but which are nonetheless argued about and nickel-and-dimed over  for weeks of months. Even contracts that aren’t particularly high risk increasingly suffer from “[[Finance contract|banking envy]]”.

But these problems require an understanding of [[Behavioural economics|human psychology]] and a [[Subject matter expert|deep grasp of the legal and market conventions]] — qualities with which your average [[Master of Business Administration|MBA]] is not liberally endowed.

Now MBAs are not known for their imagination, but they do have a long suit in reductionist analytical rigour and they do love an over-arching metaphorical schema.  Management consultants are keen on publishing these, and they will throw [[Microsoft PowerPoint|PowerPoint]] thought pieces around at the gentlest invitation. Lacking the [[subject matter expert]]’s deep grasp of the market, the “in-house legal problem” may be impervious to front-on attack, but they can ''analyse'' it into submission.