Effective legal departments are often said to be strategic. This is easy to say, but what does it mean? How can legal departments be strategic? And why is it vitally important to get right as attentions are increasingly deflected to managing growing workload on tightening budgets?
This article provides six key steps to create and follow a successful strategy – one that lets you play the strategic partner role, keeps risk and costs down, and facilitates a motivated, effective team.
1) Understanding your organisation's objectives
You need to get clear on the business' overall goals in the short and long term. Legal departments cannot be effective if they're unsure of the organisation's direction. This is more than just understanding the profit targets: it's getting under the skin of the field your organisation operates in, its main rivals and challengers, areas for growth and threats. It’s also a matter of understanding the drivers of revenue and the main cost levers that can be targeted by the business – and the legal team – to help drive performance.
Only once you have this commercial awareness can you calibrate the legal function precisely. Often in-house lawyers will need to extract this information from the business; it won’t be given to them in a neat welcome package. Meeting with senior leaders across business functions (like finance and sales) will help build a picture of the company’s focus.
2) Setting your team's objectives
Aligned with the objectives identified above, you need to set the Objectives and Key Results ("OKRs") for your team. As the business adage goes, you get what you measure, so in-house leaders must prioritise setting the team and individual OKRs. Typically, these will involve a few different layers – targeting overall business performance, legal team metrics and then tied to the organisational values. One OKR that most General Counsel should consider is continuous improvement, embedding a practice that rewards individuals who optimise processes as they go about their day job. In high cost-control environments, it’s important for your lawyers to be looking at process-level changes, as that’s where you can unlock efficiency multipliers. The trick is to ensure these OKRs are not just filed away and only revisited in 12 months. You must build a culture where your team operate in constant reference to the OKRs.
3) Managing legal risks and obligations
It seems trite to say that part of the strategy is identifying and managing risk. However, the deeper insight is ensuring you've agreed on the risk thresholds with the senior executive team. While in-house teams are fundamentally there to protect the organisation, they cannot become a millstone around its neck – the department of no, and no only. Part of the strategy process is to extract the company's risk appetite from the Board and Executive team and then cascade that down into the legal instruments and commercial negotiation playbooks. By ensuring that you're operating in lockstep with the organisation's view of acceptable risk, you will not become an unnecessary dragnet on business performance. This is vital in times of economic uncertainty, when the biggest priority can become securing revenue with as little friction as possible.
4) Mapping your capabilities
Once you know where you're heading, what you want the legal team to achieve, and how to approach risk management, you need to get clear on your delivery mechanisms. That is to say, how will you deliver the legal service? Answering this question may involve a maturity assessment across your main capabilities – people, tech, process and data. An honest analysis should identify gaps in your team: underlining whether you need more or different people, better tech, smarter processes or a more defined data strategy.
Once you have a clear picture of your capabilities, you can create a resourcing blueprint. This document should include a high-level map of all your legal matters and predicted workflows so you can decide how best to resource them. Every legal department will adopt a mixed or blended approach to delivery. Some common solutions include: flexible legal secondments to plug any gaps in bandwidth or skillset, external counsel for high-value and high-complexity matters and tech solutions for commoditised and lower-value work like NDAs.
5) Embedding data intelligence into your team
The most strategic legal teams are the ones who have complete visibility over all the matters, contracts and documents under their remit. Invariably, this will involve a tech-based solution that intelligently pulls together reporting for the General Counsel to get a snapshot on demand. The insight leaders can glean from data goes beyond the basic metrics, like the number of contracts and average turnaround time. The deeper dimensions provided include: most negotiated clauses, finding workflow bottlenecks, and current total exposure across your contracts estate. For further information on data intelligence, read: Using data to boost the value of in-house legal teams and visit the SYKE blog.
6) Considering your team’s wellbeing
One of the chief hallmarks of a strategic legal department is an engaged workforce. Managing the talent in your team is a huge area of discussion (see our earlier report, Building the next in-house legal team), but at the highest level, you should be asking yourself: are my lawyers doing the work they should be doing? In so many instances of burnout, we see lawyers burdened by routine and low-value work. Step four above should help you to map the more tedious and low-risk work away from your fulltime lawyers and to either a technology or outsourced solution. This will enable your permanent staff to be adding value and feeling more professionally fulfilled.
Bonus step – staying engaged
The in-house legal community is friendly and welcoming. Whether through community-based organisations (like the Association for Corporate Counsel), in-house lawyers enjoy sharing their experiences, lessons learned and top tips. One way to stay up to date with global trends in the in-house legal market is to read industry reports and the LOD global report is a great place to start: Risky Busyness.
Being a strategic legal department is easier said than done. It’s something that requires a focused approach and cannot be left to chance. By following these steps, in-house leaders will position their teams to be more effective.
- Developing effective in-house legal teams: seven key requirements (Thomson Reuters)
- Establishing the In-House Law Department: A Guide for an Organization's First General Counsel (Association of Corporate Counsel)
- Data-Driven Business Models: The role of legal teams in delivering success (European Company Lawyers Association)
- How To Run Your In-House Legal Department Like a Profit Centre (International In-house Counsel Journal)
- Creating a strategy for the in-house legal team (The Centre for Legal Leadership)
- A Plan is Not A Strategy (Harvard Business Review, video)
- Ten things: the "strategic” in-house lawyer (Sterling Miller)
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