An Inside Job: The Law Department as a Strategic Partner to the Business
For several months, I've been trying to pull a number of themes and thoughts together under a single banner, and what I come out with is: "The Legal Department as a Strategic Business Partner." You're probably thinking: "Yeah, yeah, yeah – every in-house leader has been saying that's what they want to be/are for as long as there has been in-house counsel." Although everyone seems to be saying it, what the heck does it mean to be a "strategic business partner"? Even I admit, as a law practice management consultant, that it sounds like "consultant-speak" or "management-speak."
The most obvious answer is that legal department strategic partnership is about lawyers learning to align their thinking and their practices with the executive perspective and business practices of the internal corporate clients they serve. They need to stop behaving so much like lawyers and start behaving more like their business-minded clients, including how they approach their work and define the results they plan to deliver. The environment or culture in which a lawyer works defines how her success will be judged; while basic, this is a pretty good definition of what separates good in-house counsel from good outside counsel. In-house counsel want to be evaluated on a scale defined by business metrics, and outside counsel want to be evaluated on a scale defined by legal success. But defining the goal does not help you figure out how to be a better partner.
Further, good alignment is hardly a distinguishing trait – it's table stakes. It's the floor, not the ceiling. Alignment is the equivalent of Strategic Business Partnering 1.0, in a world that's moving past 2.0 and pushing 3.0 adoption. So how do you put your strategic partnering practices into overdrive? Or (and here's my lapse to a consultant-speak phrase that I have to admit I use all the time), how do you accelerate your department to help them not only better support, but advance the business?
Strategic Partnering 1.0 and 2.0: Aligning legal and business priorities and supporting business functions
When I look at the real changes taking place in legal departments (internally in their own operations, and externally in their relationships with law firms and other legal service providers), I see two kinds of change: sustaining change and transformative change. Both are good, but they are very different and each drives sometimes competing or hard-to-reconcile results. One is operational and the other is strategic.
Sustaining changes are those that help lawyers do the jobs they always do, though better and more effectively. These changes are done through technology or management practices or re-engineered processes that help lawyers work more efficiently or faster, with better results, and at lower cost. Great, right? Sustaining changes drive better alignment and support businesses by providing services better, albeit in the same manner that lawyers and clients have always assumed were appropriate to a lawyer-client relationship. But such improvements in the delivery of traditional legal services do not fundamentally challenge what kinds of work lawyers (or their supervised outsourced staffing companies or LPOs) provide, or whether lawyers should be involved at all, or whether a large variety of legal services they spend a lot of money on are either necessary or valued. They are rarely truly strategic.
Transformative legal change, on the other hand, is the kind of disruptive change that challenges lawyers to think about what they're not doing or what they shouldn't be doing any longer. It's a discussion that is totally focused on what clients need and not what the lawyers want. Transformative legal change suggests important questions like:
"Why am I focused on better managing litigation rather than on how to eliminate it?" or
"I'm not so interested in the success rate of certain kids of practices we regularly deploy to address a specific kind of problem. But what I am interested in is whether the data shows us that the enterprise risk is high enough that we should have lawyers addressing that problem in the first place?"
"How would someone at Google or Uber or Apple or Elon Musk's SolarCity solve that problem?"
In today's fast-paced, highly competitive, exceedingly efficient business world, transformative and disruptive thinking, combined with data and technology, is taking strategic partnering between lawyers and their clients to a whole new level of conversation. Are you talking about any of this in your legal department? Or does your team assume that your response would be "that's just pie-in-the-sky conversation; it's interesting, but we've got work to do."
Strategic Partnering 3.0: Advancing the company's business
If you are interested in developing and expanding strategic partnering with your client at a 2.0 or 3.0 level, consider hosting conversations on some of the following topics:
What is the best possible role our legal department can play in advancing the company's business? And, in order to not limit yourself to "legal" answers, have this conversation guided by a clear understanding of the company's challenges and opportunities.
How can we spend more time working on proactive strategies, rather than on "remedial" or reactive ones?
Can legal move from being a cost center to quantifying how it is a profit center for the company? Can we measure our value in more meaningful terms than the number of hours we've worked or the number of cases we've managed? Can we measure what didn't happen because we were there before the problem arose? Can we measure the value of the contribution we've made to major business advancements in business dollars?
Should we be focused on training business managers to solve their own repeating "legal" problems (with us coming to the rescue in the rarer circumstance we haven't)? Should we be crafting and grafting "virtual" service teams for our business managers to call upon (not just law firms) to handle routine and regularly repeating matters of all kinds? Should we be in-sourcing more talent or automating more functions to free us up to focus on higher level corporate strategic initiatives?
How can we step out in front of issues or see around corners – beyond our regular compliance focus and preventive practices – to anticipate where opportunities, and not just problems, are most likely to arise? When it's an opportunity for the company or enterprise, how are we particularly well suited to help leverage it? When it's a challenge, how can we find ways to completely avoid or eliminate the risk? Can we eliminate problems, rather than better managing them or planning how to slug it out with adversaries?
What kinds of skills and talents will be valued by our client in the next 5-10 years? Will our lawyers be equipped with them? Can we train current department members or related teams? Or do we need to retire/hire to add such talent to our pool? What is our plan for professional development and for career counseling over the course of our team members' careers? How is it connected to performance and competency evaluations and compensation/promotion?
How can we make more decisions based on applying our judgment to what predictive data tells us is the better course? What kinds of predictive data can we collect and integrate into our practices (not to control us, but to better inform our decisions and move us away from reliance on what we've always done or presumed, and toward what data tells us is the actual truth).
I recently chatted with a long-time colleague who is a general counsel at British Telecom (Chris Fowler) about this issue. We were discussing how his client's various legal teams could visualize and begin to move toward department operations and a new department structure that would be more relevant in 5-10 years. Underlying the conversation was the premise that the current way that most in-house lawyers work would not be very relevant or valuable in 5-10 years.
Of course, his team still has to plan this year's and next year's budget and strategic cycles. But there's very little that's strategic in that shorter-term budget without a longer-term view. While the team will look at many issues in their conversations, they were looking for ideas that would:
Incent and reward lawyers for eliminating, not just better managing, the company's litigation or compliance issues;
Help define the skill sets, competencies, and talents that lawyers and other department members (whomever those people might be) might need in order to add value to the company's progressive business agenda if an increasing amount of routine and repeating legal work might be more likely to be handled with automation/technology;
Help redefine where they'd work and how they'd do their jobs and even what their jobs would be if those jobs weren't strictly "legal" positions, but reflective of more multidisciplinary skills.
Ex-act-ly. While they don't have the answers, part of their process was to build into the short-term planning cycle some time and resources to explore new ideas for working, most of which were not focused on doing the same ol' "remedial" law, but rather were focused on new ways to advance the company's business.
Conclusion: Heed Old-Fashioned Creeds at Your Peril
I can remember a time when traditionalists in the legal profession would suggest that lawyers who were too closely connected with their clients were engaged in unprofessional practices. These traditionalists would advise in-house attorneys that in order for a lawyer to live up to her ethical obligations of professional independence, she should keep an arm's length relationship with those she serves. Those who were embedded in the client's operations were perceived as somehow drinking a corporate Kool-Aid and that would lead to professional suicide.
Heed that old-fashioned creed at your peril, in-house lawyers! I'd suggest that NewLaw or NextLaw professionalism in in-house practice is best defined by the law department's ability to be strategic and totally immersed in and co-controlling its client's practices. In-house departments are not in-house law firms who are simply hired rather than retained to provide onsite "objective" advice. They must be offering more to be valued and strategic. Becoming a strategic and integrated partner in the advancement of the client's business does not render in-house lawyers unable to independently assess and advise on corporate decision-making and behaviors. Quite the opposite. It is precisely such immersion and proprietary attitude that provides a path for lawyers to remain relevant and perform the critical roles that business organizations need. It's what corporate clients want from their lawyers – not more hours or great legal analysis, but results that improve the entire organization's success. That is the role of the law department as a strategic partner in the client's business.
About the Author
Susan Hackett is the CEO of Legal Executive Leadership, LLC, a law practice management consulting firm she founded in 2011 after serving as the Senior Vice President and General Counsel of the Association of Corporate Counsel (ACC) for more than two decades. As an insider working with thousands of top corporate practice leaders, Susan has an amazing breadth of experience with the inner workings of in-house practice and the implementation of value-based legal models, as well as an international reputation for innovation, excellence, and success. Comments welcome to firstname.lastname@example.org.