To tag on a famous marketing slogan – the corporate legal department today, is not the legal department our parents might have known. With the swing of the in-house-outside counsel pendulum, legal departments have increasing support from the businesses – but also higher expectations to be strategic partners.
Legal departments are more carefully selecting the work that comes in, and then striving to see those matters to efficient completion. Corporate legal is fine tuning reliance on outside counsel for specialized practical experience and also for large volume work such as employment litigation.
What’s different is that today, many legal departments aren’t just the broker between the business and outside counsel. Corporate legal is where the magic is happening.
The Past is Prologue
As it is in the legal profession, in-house counsel has historically been highly-focused on reducing risk and doing so from every possible angle. Sometimes this effort, however right, or well-intended, would lead to the second order effect of “over-lawyering” and the undesirable reputation as the “business prevention department.” Meanwhile, the rest of the business worried over costs and collaboration, the legal department acted in a sense, as a service agency.
The cost pressures from the economic downturn around 2008 truly changed the paradigm. Legal department staff was thinned, budgets were scrutinized more closely, and generalists were facing increasingly complex regulatory and compliance issues – the domain of specialists.
For example, at a recent conference, insurance staff counsel noted that insurance claims agents typically perceive in-house counsel as lacking the expertise to resolve the more complex legal matters. According to staff counsel at this conference, agents typically viewed outside counsel as the preferred choice.
The Chapter of Magic
Legal department leaders today have growing responsibilities – still reducing risk, but more importantly, an advisor to the business. Many top legal officers are included as members of corporate leadership teams.
Typical job postings for the Office of General Counsel cite “collaborative” and “partnership” and almost with more frequency than legal experience. Business units are setting Service Level Agreements (SLAs) with legal departments.
An increasing number of legal departments are running Six Sigma projects and building departmental strategic roadmaps. The legal department’s role has become business enablement. Speed and responsiveness are new key metrics for the legal department, in addition to cost.
GC’s have been hiring in-house staff with expertise. The GC needs to defend the value the legal department provides to the organization — and move it from being a cost center to a strategic partnership.
Expanded In-house Roles, Greater Accountability
A decade ago outside counsel fees gained a high degree of scrutiny. However, after the rounds of law firm consolidation, the smaller law firm panels of today are generally more valued because of their skills and expertise.
Now, with more work moving in-house, the legal department is increasing the scrutiny of in-house counsel. In addition to providing a higher level of service, legal departments are struggling to be better, and improve quality.
They want their business units to use them because they’re the best at what they do, not just because they are cost-effective. In the past, the “most interesting” work would always go to outside counsel. However, with the growth of skilled staff in-house, legal department leaders want to ensure their in-house counsel are interested and engaged — and are more willing to keep such matters in-house.
An Emerging Hierarchy of In-house Tasks
What’s also emerging as a result of trends is legal departments are also saying “no” to more work. Businesses ask legal departments for a lot of help – but often requests should not require legal intervention. In fact, some of this is a distraction from the truly important legal work.
One example is employment issues that should be routed to human resources instead of legal. Another example is a sales contract for a routine deal where the outstanding question is whether terms are acceptable to the business vis-a-vis a question of legal risk.
As these larger legal departments move up the maturity model, the next challenge of efficiency may well be to organize and sort requests to focus the work that that legal – and no other business unit – can and must do. This will not be your father’s legal department.
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