Credence Services
Legal services in general, including legal services provided by in-house legal departments, could be characterized as credence services: services whose utility impact and quality are, at least partially, difficult or impossible for customers to ascertain.
An essential element of a credence service is the information asymmetry between service provider and consumers. Everyone who owns a car without knowing about cars has experience with a credence service when taking it to the garage and being charged for maintenance and repairs that only car professionals understand. In many situations, it will be obvious to other organizational constituents that legal expertise is required, but it will be difficult for them to judge the extent to which this is necessary. The quality of the service rendered will be especially difficult to judge. The actions of professionals from the legal department will always have some immediate results, but legal services are frequently intended to prevent future problems. It will then take time before it becomes apparent whether or not problems indeed arise. If they do not, it cannot logically be said that therefore the legal service was good. If they do arise, setting and circumstances may have changed fundamentally, making it hard to establish a causal connection. Additionally, the service may have been rendered by people who have long left the organization.Thus, a legal department is, to a certain extent, more than other departments such as Human Resources or Finance, a black box to the rest of the organization. From this perspective of credence services, it is easy to understand why legal departments, as various empirical studies show (KPMG 2014; RSG/BLP 2012), find it difficult to demonstrate their added value to the organization. Part of the solution to this problem lies in reducing the information asymmetry by continuously explaining the strategy a legal department applies to managing the legal function. For this, a shared view of the legal function within the legal department is essential, combined with clear and consistent communication to management and other departments.
3