Rethinking the Corporate Legal Department

1.1 ThreeTypesofLegalDepartments

There are few parts of the modern corporation that can be more conservative, defensive, and conventional than the legal department. That type of approach is now out-of-date and no longer sustainable.

Legal teams today define their mission in three possible ways:

• As a function. Still the dominant model for many companies, this is the narrowest possible interpretation of the corporate legal role. These teams view themselves as owning only issues and processes tied directly to legal work. They don't focus much, if at all, on the broader context of their organization, responding only to legal work reactively, as it pours into their departments.

• As a service. For more progressive legal teams, the emphasis is on internal service. In this model, the business leaders within the company are the clients. Success is judged by how effective the team is at satisfying internal client needs efficiently and repeatedly. Teams following this model tend to think of them­selves as problem-solvers and partners within the business.

• Asa true business unit. These teams don't simply solve the problems that their internal clients bring them—they anticipate and plan. They don't just try to run more efficiently—they innovate and experiment. They listen to their “customers”—the internal client teams—but don't limit their contributions simply to addressing their issues. Their numbers are fewer, but growing.

1.2 Bringing a Business Mindset to Legal

The emergence of new categories of technology and service providers, combined with heightened pressure for transparency, have brought the industry to what can only be described as a tipping point.

It's time to start running legal departments like a business. The General Counsels of today's legal departments must find ways to add value, deliver premium legal and business consulting services to their internal customers, and provide a compet­itive advantage to their companies.

To address this need, they are increasingly adding a new function to their management teams—the Corporate Legal Operations Executive, a COO for legal. This new role, for the first time, gave a business focus to the legal department. Because it was a new role in inhouse legal departments, training was acquired either on-the-job or through sharing best practices with others new to the role.

Today's Corporate Legal Operations Executives face significant challenges as they seek to transform and modernize their departments. The shift from thinking about Legal as functional or service unit to considering it as a true business unit is immense. It requires a huge leap forward in culture, approach, and skills. The core challenges for these leaders fall into a few core areas:

Change the Culture and Skill Set To shift towards a business unit model requires a big shift in the culture and composition of the legal team. It means stepping back from the mindset of “legal experts” to include other priorities, skills, and focus areas. Take any group of smart corporate lawyers and certain qualities are likely to be well-represented: intelligence, motivation, attention to detail. Others might be harder to find: innovation, risk-taking, entrepreneurship. To make the change work, leaders not only need to shift the priorities they set for their organization, they may need to bring in new contributors to the team who don't come from traditional legal backgrounds.

Set Clear Goals There is no growth or evolution possible without goal-setting and measurement. This starts by setting the right goals. What are the things that matter the most to the team? Is it speed of execution? Service to internal clients? Innovation in processes and practices? Goal-setting can be a shallow and limited exercise at some companies. Done right, it is a powerful opportunity to focus objectives and get aligned as an organization.

Define and Track the Right Metrics Once the right goals are in place, then begins the hard work of measuring and tracking your results over time. This is the only way to drive progress and change, but it is also a very uncomfortable practice for many legal departments. In many cases, the data may not exist—it can simply be something that is not currently tracked. It takes time and effort to create a true dashboard that actually speaks to performance against goals, but it is worth it.

Connect to Internal Customers How successful would a business be if it simply waited for customers to walk in? Yet, that is how many legal departments operate. Possibly the biggest key to running a legal department like an effective business is engagement. This means, first of all, engaging with internal customers. Do you meet regularly with your stakeholders around the business to understand their context and to identify ways you can help? Do you adapt your processes to fit them, rather than expect them to change how they work? The goal is to be engaged and connected with stakeholders and to foster a lasting relationship with them.

Engage with Partners It also means engaging with potential partners. Don't look at other companies' legal teams as competitive threats but as potential allies. It makes sense to create relationships and connections across the industry because some threats and opportunities require collective action.

Manage the Value Chain To be effective, every business must optimize its value chain. This means deciding what is created internally, what is outsourced, and everything is combined to deliver value to the customer in a cost-effective way. Is the team working with the right suppliers? Are they supporting the same strategy and goals? Are business terms structured in the right way?

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