The New Normal

Want Quality? Learn to Operate

Posted Jul 26, 2012 6:45 PM CDT
By Paul Lippe

Paul Lippe

Let’s talk about two doctors, and consider who is the most talented, the most important.

Brenda Brain Surgeon is the chief of Neurosurgery at Mass General Hospital. Brenda has nimble hands, deep insight, and a calm demeanor. She excelled through four years of medical school, six years of residency, and four years of fellowships at top programs. When she operates, the room is silent, the patient sedated, and younger doctors and operating room nurses hover at her beck and call. She has a waiting list of patients, and makes $1,500,000/year. Many (but not all) of her patients do well after surgery.

Victor VHA Chief Medical Officer is the senior physician for the Veterans Health Administration Medical system, one of the largest medical delivery systems in the world. Victor is responsible for overall policy-setting for tens of millions of veterans and their families. The VHA is a leader in both outcomes research and electronic medical records, and is rated more favorably than other health care providers who spend more per patient. Victor has to worry about training and retaining doctors and nurses among the VHA’s 240,000 employees, setting care guidelines, trading off costs within his $47 billion budget and making sure patients take the meds they are prescribed and don’t do things to make their health worse. He has brain surgeons (none perhaps quite as individually skilled as Brenda) working for the VHA, but he can’t afford to have them operate in all the scenarios Brenda would. Victor makes $250,000/year, and has a good pension.

Who’s the top doc, Brenda or Victor?

Most lawyers, and indeed most professionals, would probably pick Brenda, because she better conforms to the professional ideals of autonomy and excellence.

But most clients (and perhaps a majority of general counsel) would say Victor, because most of the problems in the medical system (and indeed the legal system) are not ones that yield to marginally superior individual expertise, but are systemic problems that require systemic and operational solutions.

Welcome to the Age of Operational Law.

Last week I got up in the middle of the night (2 a.m. to be exact) to be on a global conference call with a large European-based company and their legal process outsourcer (LPO) to try to help the company figure out how to simplify/consolidate contracting processes across Asia. The LPO had put together a 75-page proposal that reflected a deep and specific knowledge of how to get legal work done well beyond anything I’ve ever seen from a law firm. The strength of the LPO is not that they are pretty-good-but-cheaper lawyers; the strength of the LPO is that they are materially better at process because they focus on outcomes, not themselves.

Many lawyers are quick to denigrate the operational side of law as “commodity,” implying that work at scale is less valuable, that Brenda is always the better professional than Victor. That’s foolish, bordering on crazy. To see how operational law drives quality, read the Smarter Legal Model by Trevor Faure, the General Counsel of Ernst & Young, based in London. Smarter Legal Model is probably the best book on how to apply modern, operational approaches to law and to begin to think about how accounting firms are a primary “customer” for legal services.

Let’s spend a second on developments–also health-care-related–on the other side of law, what we might call the judgment side, as opposed to the operational side. Four Associate Justices concluded that the Affordable Care Act violated the Commerce Clause; four said it was fine under the Commerce Clause, and the Chief Justice said it was not OK under the Commerce Clause but was OK as an exercise of the Taxing Power. Neither of the two advocates in the case (the current and former Solicitors Generals) had spent much time on the Taxing Authority argument, because in their judgment it wasn’t the key issue in the case.

So the cumulative effect of all that superb judgment was … a decision that was pretty darned subjective, and did precious little to advance the ball on the real question–how can we have an effective health care system at reasonable cost with reasonable access, but which also retains some measure of accountability?

I’m not against judgment, and I think the court does the best job it can, reflecting competing values. But one ought to recognize the limits of judgment, especially when no one seems to be able to convince the other fellow to change their judgment.

Look at several of the catastrophic failures that happened over the last month:

GSK having to pay a $3 billion fine because of drug labeling issues;

• The LIBOR disaster in London with reverberations around the world; and

HSBC’s alleged money-laundering.

None of them were rooted in a lack of legal judgment, insufficient and nuanced awareness or complex arguments that certain behaviors were unethical or illegal; they were all rooted in systemic failures of management, supervision, persuasion, information and incentives.

For law (as well as medicine), most of the problems, most of the drivers of quality, and most of the growth is operational-related, not judgment-related. We need to get better on the operational side. Trevor was trained as a barrister; he’s not an MBA, but he figured this all out, so there’s no reason the rest of can’t–just buy the book.

Brenda’s great (although my goal is not to have her as my surgeon, but never to need to have her as my surgeon), but Victor’s the difference maker and the future.

Paul Lippe is the CEO of the Legal OnRamp, a Silicon Valley-based initiative founded in cooperation with Cisco Systems to improve legal quality and efficiency through collaboration, automation and process re-engineering.

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