Last week I held an all-day seminar for a group of lawyers from a big company. A good time was had by all—they asked plenty of questions and apparently came away thinking that my approach had real merit.
Given that I recently posted an item suggesting how law-firm associates might navigate obstacles to change in drafting, this seminar got me thinking about whether institutional factors play a role in determining how receptive company legal departments are to change, as compared to law firms. (Let’s assume I’m comparing Fortune 500 company legal departments with American Lawyer 100 law firms.)
Many legal departments handle enormous numbers of contracts, but generally they’re called on to draft a more limited range of contracts than are law firms. That’s no surprise—legal departments have one client, whereas law firms have many. It’s easier to change how you draft if you need to overhaul only a limited number of contracts.
To successfully implement change, the entire chain of command needs to buy into it. The chain of command at law firms—from first-year associates to managing partner—is perhaps generally longer than that in many legal departments. And given that many law firms consist of a loose collection of fiefdoms, a law firm will generally have many more chains of command—albeit informal ones—than a legal department. Both factors make change harder to implement at law firms.
Changing how any organization drafts contracts necessarily involves imposing greater centralized control. Law firms remain in thrall to the billable hour, so partners and associates who spend time implementing and maintaining a centralized drafting initiative would likely receive fewer rewards than they would have if they had spent that time on billable work.
The billable hour also rewards inefficiency—the more time it takes a law firm to draft its contracts, the more money the law firm makes. Why would law firms seek to change a system that has served them well? By contrast, legal departments see that they’re the ones footing the bill. And with respect to their own drafting, they have no one to pass the costs on to. That would give them an incentive to approach the task more efficiently.
And perhaps one should also consider the world view of the law-firm partner as compared to that of the in-house lawyer. The partner presumably seeks to convey a sense of mastery, particularly to potential clients. Having me suggest, from the peanut gallery, that their mastery doesn’t extend to drafting could strike a dissonant note. By contrast, the in-house lawyer would seem to be playing to a smaller audience and might be more receptive to anything that allows them to get the job done efficiently and within budget.
So all things being equal, legal departments might have an easier time than law firms changing how they draft contracts.
1 thought on “Who’s More Open to Change, Law Firms or Legal Departments?”