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Do financial services companies provide value?
There is an interesting Forbes article by John Bogle in the November 17 issue.
To summarize, Bogle determined that in a recent year, the "financial services" industry effectively took $620 billion off the top for a 7% fee on $9.5 trillion value of stocks, or 2% of a $30 trillion value of bonds, or 1.5% of $40 trillion value of US securities. Now we're not sure who Bogle has included in his definition of the "financial services industry as the "croupiers," "the money shufflers and middlemen." It doesn't really matter because his point is not about the specific cost but the role of those folks in the market.
Bogle refers to Warren Buffett's letter (PDF) in the 2005 annual report for Berkshire Hathaway. In his extended analogy, Buffett makes the general point that if one family owns all the shares of all the companies, some family members paying advisors to get a net larger slice of the pie vis-a-vis other family members is unwise because the total FCF for distribution is the same and the advisors will take away from the distributions to the family. Of course, the question of whether the family as a whole is better off is, perhaps, the right question but not the one actually being presented. Each family member in the hypothetical is trying to increase that person's FCF without regard to the FCF of the rest of the family. (OPEC & the difficulty in keeping cartel members from cheating or the more basic prisoner's dilemma are obvious parallels.)
Once the option exists to choose individual investments, as opposed to market-wide index funds, advice to optimize the portfolio becomes a rational alternative to consider, with the rationality of the choice a separate issue that is more complicated. Buffett, and now Bogle, seems to say that seeking advice does not make sense.
Do portfolio-pickers and brokers (and that's the category with which Bogle seems most concerned) cost too much? Maybe. Some do, some don't. Doesn't the performance of the pick matter? Consider a relatively simple question of choosing a traditional market-cap weighted index fund vs. a dollar-weighted index fund or equally weighted index fund. Those returns are different. Is the investment advice that points you to the right one worth more? At least worth something?
What this article sparked for us was the recognition that companies are in fact much like Buffett's fictional family and yet also very different. On the one hand, a company consists of a portfolio of products, services, customers, and assets. Each company would be hard pressed to justify internal competition that doesn't have the effect of improving firm FCF. So advice doesn't make sense.
At the same time, cannibalization is a growing in acceptance as a part of corporate strategy. So each company is like an individual family member looking to improve its poosition as against its competition. Certainly, advice then makes sense.
So, while TSC can be described as a financial services company, we don't really operate in the same market that troubles Bogle. We help companies determine how to improve their free cash flow by analyzing the datastream of their business portfolio. Our insights may revolve around the acquisition of capital, the growth of revenue, the control over costs, and the reinvestment in the business, but in many ways they're fundamentally different from pure stock market advice. Of course, we have considered the application of our algorithms and equations to private wealth portfolio management, the selection of pairs of securities appropriate for hedged opportunities, synthetic M&A trading strategies, and portfolio optimization -- so maybe we are more of a financial services company than we think.
How Bailout courses of action should affect your business model This article from the 2001 Nobel laureate in economics is a concise and cogent description of the courses of action re: the bailout.
We're pleased to see that someone is talking about the need for quality due diligence and the potential risks of shoddy or slight investigations into value. We have pushed this message with our M&A acquiror and PE investor clients. They understand pretty readily once the costs are discussed.
Where we still find the most disbelief or unwillingness to accept the facts that diligence leads to estimates of value that support transactions that actually get executed is on the target/portfolio company side of things. Founders and CEOs find it difficult to explain how they will actually achieve the numbers in their projections; we often find that the fundamental business model is unexamined. By business model, we mean not the spreadsheet itself but the concept of the business, in terms of how efficiently a company uses its invested capital to produce revenue, how well it controls product costs as it converts revenue to gross income, how it controls operating expenses as it achieves EBITDA numbers, how it organizes its capital structure as reflected in EBT, and how it manages tax issues as reflected by Net Income, and finally how it balances reinvestment in the business and invested capital as we turn to a pure free cash flow (FCF) number.
We are building new tools and offerings to help companies at the board and senior management level think about their business model in the level of detail required to understand the implications of investor expectations. We focus on simplifying complexity to help direct management attention to the right links in the FCF value chain.
As we start presenting our ideas to the market, we'll announce more here.
Rethinking your workspace In this article, David Allen of GTD fame discusses the office hardware that supports his implementation of GTD. And by hardware, I don't mean computers, I mean the aluminum, wood, and plastic contraptions and tools that populate our offices, that create the environmental backdrop for our workdays.
Long Hours in the Business World Our two previous posts on the effects of long hours on errors and reduced productivity focused on two professions, doctors and lawyers. We picked those two rather than further explore the issue in the military because long hours for doctors and lawyers are purposely selected by managers whereas soldiers work long during wartime or training for wartime. This choice to impose long hours implies acceptance of the costs and benefits that result; the professions also have higher duties to the public, not just their patients and clients, that are codified in various ethical codes as well as actual statutes.
The original article sparking the discussion, however, came not from the professions but from the business world, and so we thought it would be helpful to discuss these issues in light of two additional fields where long hours are already on the table: consultants and business in general. We think that exploring the reasons why long hours in these fields might not be so readily discovered as a source of problems will help design appropriate experiments for firms to undertake as they seek continuous improvement.
Let' start with consultants. We have had substantial experience with the consulting world, and long hours are almost a badge of honor in the field. Travel is an additional duty for consultants, and an extra 10 hours a week of travel is not unusual, even for those who work all week at a single client location. If long hours reduces productivity and increases the likelihood of errors, why aren't these problems apparent or acknowledged by consultants?
First, like lawyers, consultants typically bill by time (even if their firms do not, consultants are tracked by hours per project). This hourly approach creates, if not a perverse incentive, the complication that it is hard to distinguish between lots of optimal work and lots of inefficient work. This lack of clarity affects the consultant, the firm, and the client, all without any bad faith. Indeed, benchmarking one consultant against another to compare the time taken for various tasks would likely show the same sorts of performance losses and hence be taken for normal performance. In other words, two folks performing at 80% would each give the appearance of 100% if matched against one another; of course, that's the wrong question.
Second, unlike doctors, whose "mistakes" often have immediate effects, any errors caused by consultants may never be discovered or be revealed to have any effect. (Of course, the counter-argument is that if a mistake doesn't have any ill effect, it's not a mistake.) But the lack of revelation is different from the actual mistake. For example, imagine a spreadsheet that contains errors in formulas used to support part of a decision analysis. If the right decision doesn't get made, in part because of the spreadsheet calculations, it may be invisible to the participants, but the end result will not be. Companies regularly miss earnings projections (at least they would if they weren't so heavily managed) and often fail to earn their cost of capital. Those are certainly "mistakes," broadly construed, and virtually impossible to connect to a specific action.
It's clear that this second point is the one most likely at work in the corporate world. Once we moved most work from factory or manufacturing work that is relatively easy to measure to much fuzzier knowledge work, we exposed ourselves to productivity problems and cures of all kinds, all equally undefinable and unreliable. In the same way that it is difficult to determine the effects of fatigue on productivity, it is difficult to sort out what benefits in performance may be expected from other changes. This disconnection is one reason that usability experts are still focused on getting businesses to implement changes that are easy to measure, such as intranet structure for common activities.
If it's hard to observe and measure real-world effects of chronic fatigue and long hours, where can we get evidence about the likely effects that is convincing enough to allow leaders to implement changes, or at least tests, in their organizations? Well, some of that research already exists and was referenced in the original article. The Belenky article describes the pattern of failure from sleep deprivation. Performance slowly degrades until a critical failure is reached because the time available to make a decision or analysis arrives while the decision-making process is not complete. "Thus, a gradual decline in performance during simulations or laboratory studies maps into a long period of apparently adequate, if not good, performance in actual operations, and then, suddenly, failure. " This paradigm is supported by our personal experience in Ranger School (described in the article as 3.6 hours of sleep -- we wish we saw that much every day!), in military training, in Ivy League graduate school, in careers in professional services organizations, and in our current roles leading our own portfolio of businesses.
Is knowledge work like that described by Col. Belenky? We think so. The dichotomy between the sustained ability to complete physical tasks and the degraded ability to maintain situational (or strategic) awareness, the context for those physical tasks, describes very well the difficulties facing people in the corporate world. It remains possible to read and type, to even modestly edit and review presentations and spreadsheets and documents, but the strategic viewpoint, the stream of constant background analysis that is the hallmark of good decision-making, is lost. This continuing failure to appreciate the big picture, if it affects all those folks involved in strategic decision making as a result of long hours at work over time, could explain the almost random performance of corporations and the failures we have seen to make even the most basic decisions right on a consistent basis, namely ensuring that the firm earns its cost of capital.
This degradation results in a constant watering-down of analysis since the simple tasks are done and the obvious connections made. But the competition can be assumed to make the same simple connections as well. Working smarter, not harder, has been a theme for the last 15 years, since automation and knowledge management become more accessible through the ready availability of information technology resources to almost all workers. While that may be true, What we're learning, however, is that working harder is almost certainly not working smarter.
Big law firm hours explained - competing interests This is the second in our series of three posts relating to the idea that long hours, substantially over 40 hours per week, lead to reduced cognitive function and poor performance, most notably lower productivity per unit of time.
Our first post reframed and rehashed these arguments in the context of the medical profession, notably the long hours of medical residents, which some medical groups now suggest should be limited to an average of 80 hours per week.
We wrote how even if you exempted malpractice in the legal, actionable sense from the discussion, professional ethics should lead doctors to reduce hours for residents. (Question: are all hospital administrators practicing physicians? Certainly shareholders are not.) The next profession we are going to analyze is the legal profession. Not only do we have direct experience here, we have also been in the position of law firm client (too many times, most would say). The situation for lawyers is akin to that of doctors: malpractice is an actionable claim for injured clients; professional ethics create obligations governing one's practice.
Do firms have an ethical obligation to reduce attorney billable hours to reduce risk of poor performance? Do they have an ethical obligation to reduce billable hours to reduce low productivity, which results in larger bills for the same work? What about clients? Certainly the primary clients of large law firms are large corporations, who might be more knowledgeable than individuals about these effects. Also, given the outside legal budgets of large corporations, they probably experience low-probability events on a regular basis and so can expect that there is some harm to them from these issues. Does anyone know of large corporations that have firm restrictions on the number of hours that may be billed to them by a single lawyer, or by such a lawyer in a week, month, or year?
We are attempting to identify some future research opportunities in this field. Does anyone have connections inside a legal malpractice insurer? We would be interested in tracking claim experience by firm size and hour requirements. Similarly, we are preparing a proposal for corporate counsel at large commercial firms to evaluate lawyer performance in light of these issues.
Business people inside corporations and acting as consultants are our next area of inquiry in this sleep deprivation/overwork trifecta.
To summarize, Bogle determined that in a recent year, the "financial services" industry effectively took $620 billion off the top for a 7% fee on $9.5 trillion value of stocks, or 2% of a $30 trillion value of bonds, or 1.5% of $40 trillion value of US securities. Now we're not sure who Bogle has included in his definition of the "financial services industry as the "croupiers," "the money shufflers and middlemen." It doesn't really matter because his point is not about the specific cost but the role of those folks in the market.
Bogle refers to Warren Buffett's letter (PDF) in the 2005 annual report for Berkshire Hathaway. In his extended analogy, Buffett makes the general point that if one family owns all the shares of all the companies, some family members paying advisors to get a net larger slice of the pie vis-a-vis other family members is unwise because the total FCF for distribution is the same and the advisors will take away from the distributions to the family. Of course, the question of whether the family as a whole is better off is, perhaps, the right question but not the one actually being presented. Each family member in the hypothetical is trying to increase that person's FCF without regard to the FCF of the rest of the family. (OPEC & the difficulty in keeping cartel members from cheating or the more basic prisoner's dilemma are obvious parallels.)
Once the option exists to choose individual investments, as opposed to market-wide index funds, advice to optimize the portfolio becomes a rational alternative to consider, with the rationality of the choice a separate issue that is more complicated. Buffett, and now Bogle, seems to say that seeking advice does not make sense.
Do portfolio-pickers and brokers (and that's the category with which Bogle seems most concerned) cost too much? Maybe. Some do, some don't. Doesn't the performance of the pick matter? Consider a relatively simple question of choosing a traditional market-cap weighted index fund vs. a dollar-weighted index fund or equally weighted index fund. Those returns are different. Is the investment advice that points you to the right one worth more? At least worth something?
What this article sparked for us was the recognition that companies are in fact much like Buffett's fictional family and yet also very different. On the one hand, a company consists of a portfolio of products, services, customers, and assets. Each company would be hard pressed to justify internal competition that doesn't have the effect of improving firm FCF. So advice doesn't make sense.
At the same time, cannibalization is a growing in acceptance as a part of corporate strategy. So each company is like an individual family member looking to improve its poosition as against its competition. Certainly, advice then makes sense.
So, while TSC can be described as a financial services company, we don't really operate in the same market that troubles Bogle. We help companies determine how to improve their free cash flow by analyzing the datastream of their business portfolio. Our insights may revolve around the acquisition of capital, the growth of revenue, the control over costs, and the reinvestment in the business, but in many ways they're fundamentally different from pure stock market advice. Of course, we have considered the application of our algorithms and equations to private wealth portfolio management, the selection of pairs of securities appropriate for hedged opportunities, synthetic M&A trading strategies, and portfolio optimization -- so maybe we are more of a financial services company than we think.
Labels: execution, IDM, performance, tips
Saturday, December 06, 2008 :: posted by Rick Colosimo @ 1:32 PM
How Bailout courses of action should affect your business model This article from the 2001 Nobel laureate in economics is a concise and cogent description of the courses of action re: the bailout.
We're pleased to see that someone is talking about the need for quality due diligence and the potential risks of shoddy or slight investigations into value. We have pushed this message with our M&A acquiror and PE investor clients. They understand pretty readily once the costs are discussed.
Where we still find the most disbelief or unwillingness to accept the facts that diligence leads to estimates of value that support transactions that actually get executed is on the target/portfolio company side of things. Founders and CEOs find it difficult to explain how they will actually achieve the numbers in their projections; we often find that the fundamental business model is unexamined. By business model, we mean not the spreadsheet itself but the concept of the business, in terms of how efficiently a company uses its invested capital to produce revenue, how well it controls product costs as it converts revenue to gross income, how it controls operating expenses as it achieves EBITDA numbers, how it organizes its capital structure as reflected in EBT, and how it manages tax issues as reflected by Net Income, and finally how it balances reinvestment in the business and invested capital as we turn to a pure free cash flow (FCF) number.
We are building new tools and offerings to help companies at the board and senior management level think about their business model in the level of detail required to understand the implications of investor expectations. We focus on simplifying complexity to help direct management attention to the right links in the FCF value chain.
As we start presenting our ideas to the market, we'll announce more here.
Labels: due diligence, expectations, governance, performance
Monday, October 06, 2008 :: posted by Rick Colosimo @ 10:54 AM
Rethinking your workspace In this article, David Allen of GTD fame discusses the office hardware that supports his implementation of GTD. And by hardware, I don't mean computers, I mean the aluminum, wood, and plastic contraptions and tools that populate our offices, that create the environmental backdrop for our workdays.
We've come across a similar analysis of office supplies that focuses more on actual specifics of style and even daily usage guidelines. Pierre Khawand, of People-OnTheGo, has an entire seminar on Accomplishing More with Less. Pierre's seminars actually exist in both live and web-based versions so you don't have to be local to the SF Bay Area to participate.
The piece of this seminar that really grabbed my attention was so good that I really do hesitate to reveal it here. Let me say just that Pierre walks participants through a complete reconstruction of their work (and home, if you do/leave work there) environments to help you rationalize everything that you use to capture, store, use, and transmit information. It's a service I've long thought he should provide on an individual basis to busy executives and professionals.
Those of you interested in learning more about AML should contact Pierre directly; anyone interested in customized service should contact me and we'll work out a plan of attack to get Pierre's system working in your office. This plan is not about office organization; it's about rationalization in a one-person-sized unit of business process reengineering: it's BPR for your desk.
Labels: performance, tips
Tuesday, June 24, 2008 :: posted by Rick Colosimo @ 11:37 PM
Long Hours in the Business World Our two previous posts on the effects of long hours on errors and reduced productivity focused on two professions, doctors and lawyers. We picked those two rather than further explore the issue in the military because long hours for doctors and lawyers are purposely selected by managers whereas soldiers work long during wartime or training for wartime. This choice to impose long hours implies acceptance of the costs and benefits that result; the professions also have higher duties to the public, not just their patients and clients, that are codified in various ethical codes as well as actual statutes.
The original article sparking the discussion, however, came not from the professions but from the business world, and so we thought it would be helpful to discuss these issues in light of two additional fields where long hours are already on the table: consultants and business in general. We think that exploring the reasons why long hours in these fields might not be so readily discovered as a source of problems will help design appropriate experiments for firms to undertake as they seek continuous improvement.
Let' start with consultants. We have had substantial experience with the consulting world, and long hours are almost a badge of honor in the field. Travel is an additional duty for consultants, and an extra 10 hours a week of travel is not unusual, even for those who work all week at a single client location. If long hours reduces productivity and increases the likelihood of errors, why aren't these problems apparent or acknowledged by consultants?
First, like lawyers, consultants typically bill by time (even if their firms do not, consultants are tracked by hours per project). This hourly approach creates, if not a perverse incentive, the complication that it is hard to distinguish between lots of optimal work and lots of inefficient work. This lack of clarity affects the consultant, the firm, and the client, all without any bad faith. Indeed, benchmarking one consultant against another to compare the time taken for various tasks would likely show the same sorts of performance losses and hence be taken for normal performance. In other words, two folks performing at 80% would each give the appearance of 100% if matched against one another; of course, that's the wrong question.
Second, unlike doctors, whose "mistakes" often have immediate effects, any errors caused by consultants may never be discovered or be revealed to have any effect. (Of course, the counter-argument is that if a mistake doesn't have any ill effect, it's not a mistake.) But the lack of revelation is different from the actual mistake. For example, imagine a spreadsheet that contains errors in formulas used to support part of a decision analysis. If the right decision doesn't get made, in part because of the spreadsheet calculations, it may be invisible to the participants, but the end result will not be. Companies regularly miss earnings projections (at least they would if they weren't so heavily managed) and often fail to earn their cost of capital. Those are certainly "mistakes," broadly construed, and virtually impossible to connect to a specific action.
It's clear that this second point is the one most likely at work in the corporate world. Once we moved most work from factory or manufacturing work that is relatively easy to measure to much fuzzier knowledge work, we exposed ourselves to productivity problems and cures of all kinds, all equally undefinable and unreliable. In the same way that it is difficult to determine the effects of fatigue on productivity, it is difficult to sort out what benefits in performance may be expected from other changes. This disconnection is one reason that usability experts are still focused on getting businesses to implement changes that are easy to measure, such as intranet structure for common activities.
If it's hard to observe and measure real-world effects of chronic fatigue and long hours, where can we get evidence about the likely effects that is convincing enough to allow leaders to implement changes, or at least tests, in their organizations? Well, some of that research already exists and was referenced in the original article. The Belenky article describes the pattern of failure from sleep deprivation. Performance slowly degrades until a critical failure is reached because the time available to make a decision or analysis arrives while the decision-making process is not complete. "Thus, a gradual decline in performance during simulations or laboratory studies maps into a long period of apparently adequate, if not good, performance in actual operations, and then, suddenly, failure. " This paradigm is supported by our personal experience in Ranger School (described in the article as 3.6 hours of sleep -- we wish we saw that much every day!), in military training, in Ivy League graduate school, in careers in professional services organizations, and in our current roles leading our own portfolio of businesses.
Is knowledge work like that described by Col. Belenky? We think so. The dichotomy between the sustained ability to complete physical tasks and the degraded ability to maintain situational (or strategic) awareness, the context for those physical tasks, describes very well the difficulties facing people in the corporate world. It remains possible to read and type, to even modestly edit and review presentations and spreadsheets and documents, but the strategic viewpoint, the stream of constant background analysis that is the hallmark of good decision-making, is lost. This continuing failure to appreciate the big picture, if it affects all those folks involved in strategic decision making as a result of long hours at work over time, could explain the almost random performance of corporations and the failures we have seen to make even the most basic decisions right on a consistent basis, namely ensuring that the firm earns its cost of capital.
This degradation results in a constant watering-down of analysis since the simple tasks are done and the obvious connections made. But the competition can be assumed to make the same simple connections as well. Working smarter, not harder, has been a theme for the last 15 years, since automation and knowledge management become more accessible through the ready availability of information technology resources to almost all workers. While that may be true, What we're learning, however, is that working harder is almost certainly not working smarter.
Labels: leadership, performance
Tuesday, January 08, 2008 :: posted by Rick Colosimo @ 10:11 AM
Big law firm hours explained - competing interests This is the second in our series of three posts relating to the idea that long hours, substantially over 40 hours per week, lead to reduced cognitive function and poor performance, most notably lower productivity per unit of time.
Our first post reframed and rehashed these arguments in the context of the medical profession, notably the long hours of medical residents, which some medical groups now suggest should be limited to an average of 80 hours per week.
We wrote how even if you exempted malpractice in the legal, actionable sense from the discussion, professional ethics should lead doctors to reduce hours for residents. (Question: are all hospital administrators practicing physicians? Certainly shareholders are not.) The next profession we are going to analyze is the legal profession. Not only do we have direct experience here, we have also been in the position of law firm client (too many times, most would say). The situation for lawyers is akin to that of doctors: malpractice is an actionable claim for injured clients; professional ethics create obligations governing one's practice.
If you accept the general premise that lengthy hours have a dual effect of both reducing productivity and increasing the likelihood of mistakes, then lawyers, and by extension their law firms, are probably committing professional errors (meaning a breach of the general code of ethics requiring competence), if not actual malpractice, by increasing billable hours per associate. Various times throughout the last ten years (and obviously much before that as well), first-year lawyers have been the recipients of dramatic increases in salary. Of course, there's no such thing as a free lunch, and the tradeoff for associates has typically been increased billable hour requirements. Firm have typically chosen to increase the hours of associates and partners rather than maintain the hour requirements and increase the numbers of lawyers. This increase in hours is driven by the increase in salaries, which in turn drives tuition hikes.
So, where are the studies that show the increase in mistakes for lawyers, like the ones for doctors? They don't exist. Why is that? Several reasons:
- Big law firms typically bill clients by the hour for legal services. If productivity declines and it takes longer to resolve matters, the first and most obvious result in increased billable hours. So, rather than poor medical outcomes for patients, which are noticeable to those outside the hospital, we have larger bills, which are certainly noticeable to the clients but not distinguishable from "business as usual."
- Errors that would lead to malpractice seldom lead to actual malpractice claims. Not only are errors often caught by other lawyers involved in a matter, but the errors themselves are harder to identify as errors, since they seldom have immediate effects and the true outcome may not be known for months in a transactional matter or even years in a litigation. Many errors are harmless because the circumstances that would trigger them fail to arise; a choice of law clause only becomes relevant when litigation is contemplated. Even when matters do turn for the worse, the idea that a negative outcome could be traced to a single error, which could then be traced to acute or chronic sleep deprivation, is harder to imagine.
- It's possible that even when operating at a sub-par level, the types of lawyers who work at big firms may still perform at the standard of care, which is more generally based on lawyers overall. This argument has a lot of assumptions and perceptions built into it, which should be made explicit:
- Associates who go to big firms are commonly perceived (at least among those seeking to go to big firms and among the big firms hiring them) to be of higher quality than those who aim differently following law school. They are perceived to be generally more capable legally.
- Associates at big firms are perceived to be harder workers, or at least to have worked harder, in terms of more hours, during law school. Big firms prize law review membership and high grades, assuming that the former's hourly commitment combined with the latter's intellectual performance will translate well to the firm environment.
- One of the key skills for lawyers is attention to detail, and that is another one of the skills for which good grades and law review time are supposed to be proxies.
- Another difference between medical practice and legal practice, related to point #1 is that because of the fee-sharing restrictions in legal ethics codes, lawyers still run their own practices. Not always from a day-to-day perspective, where smarter firms are hiring non-lawyers to manage the business while leadership is to be provided by senior lawyers. The medical field has not had such a restriction in a very long time, exacerbated perhaps by early concerns about the effects of medical malpractice exposure to individual doctors. That led to the ability to restrict professional liability and to growth to spread risk. Many of those larger entities became public entities with shareholders and other investors. While it is obviously common for hospitals to be run by doctors, it is not required. The key argument for why law firms should not be owned by non-lawyers is that the profession does not want lawyers to be subject to people who did not have the same ethical obligations as the lawyers. Where this tension currently exists, however, is in corporate legal departments, and the complications are clearly there.
Do firms have an ethical obligation to reduce attorney billable hours to reduce risk of poor performance? Do they have an ethical obligation to reduce billable hours to reduce low productivity, which results in larger bills for the same work? What about clients? Certainly the primary clients of large law firms are large corporations, who might be more knowledgeable than individuals about these effects. Also, given the outside legal budgets of large corporations, they probably experience low-probability events on a regular basis and so can expect that there is some harm to them from these issues. Does anyone know of large corporations that have firm restrictions on the number of hours that may be billed to them by a single lawyer, or by such a lawyer in a week, month, or year?
We are attempting to identify some future research opportunities in this field. Does anyone have connections inside a legal malpractice insurer? We would be interested in tracking claim experience by firm size and hour requirements. Similarly, we are preparing a proposal for corporate counsel at large commercial firms to evaluate lawyer performance in light of these issues.
Business people inside corporations and acting as consultants are our next area of inquiry in this sleep deprivation/overwork trifecta.
Labels: leadership, performance
Sunday, January 06, 2008 :: posted by Rick Colosimo @ 11:02 AM
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