Run Legal as a Business
3.1 It's an Opportunity
The fundamental change in the legal industry creates tremendous opportunity for lawyers. It creates new business opportunities in the legal services industry (be it at LPO’s, in law firms or in legal technology companies).
It opens up new roles for lawyers in business functions—Chomicka has made a convincing case for that in her article.[256] Last but not least, it enables—or even calls for—a radically new role description for lawyers in inhouse departments. All of this is based on the evolution of legal, leaving the ivory tower and enjoying the benefits of much closer interaction with all other business functions, changing the perception of legal from “special” to “unique”. A broad and collaborative mindset internally and externally, towards service providers, as much as peers and also the academic world, will be the lever to capitalize on those opportunities.3.2 Run Legal with Business Discipline
Running legal as a business means first and foremost to apply business discipline to legal. Sounds trivial, so what does it mean? The definition I prefer is that business discipline means to help the business grow in the long term, rather than taking advantage of short term.[257]
The first element points to business focus aiming at growth. Engraining business focus into the DNA of legal means to make sure that everyone is clear about why legal exists in a company. The answer is: legal exists in order to create measurable value that supports the company in achieving its goals—after legal ideally has participated actively in shaping them. As stated earlier, this is not about “going fully native”, but rather about leveraging our ability to balance the dual role we hold, i.e. to combine the role of guardians of the company with our business enabler role. The business functions are our clients, but the shareholders are our “boss”.
The second element is to prioritize the long term perspective over the short term gain. This builds on a skill that is typically attributed to lawyers—and rightfully so. We are known to be trained in analyzing, overseeing and admittedly also in being able to create complex systems. Clearly, the point to watch is that we control the risk to translate complexity into complication, as this is rarely truly required to achieve the desired outcome. How can we simplify and streamline business situations to enable speed and simplicity? Long term thinking is the call to action that we consider the broader effects of decisions. While, for example, sales functions are typically being measured on short term goals, while many stakeholders will be focused on a certain aspect of a contract or deal, our job is it to not only help all of them achieve their goals, but also to explain the interest of the other party to them, to explain the broader context, lay out the options, provide a clear recommendation based on translating the interests ideally into a win-win for both sides.
Bottom line, business discipline provides the perfect bridge for connecting the new interpretation of the role of Legal. It marries the aim of value creation with the role of being a guardian for the company.
3.3... and the Same Rules Apply
Running legal as a business function emphasizes the importance of managerial effectiveness. Consistent and strong performance has preconditions, but those are well known and just need to be translated into legal. “Lawyering has become a business and therefore has to follow the rules of business.”[258]
It starts with a vision that embraces the new reality in the legal market, the change it requires as well as the opportunity it holds. It needs a clearly cut mission statement to frame the new mindset and the redefined roles of lawyers. The goals must aim to create value, i.e. they must be related to the company goals and, at the same time, be tied to making progress towards the vision, while clearly defined key performance indicators (KPI's), have to enable the leadership, the team and also the business partners at all levels to understand the performance against the goals.
Finally, performance management has to be based on SMART goals, i.e. measuring is a key factor to success.[259]Here we look at the additional upside of the rise of legal technology. Embracing legal technology will not only open up the efficiency gains of automation, but it will also create a wealth of data that is generated automatically, as the application gets used. Thus, it is of critical importance to deploy technology that is implemented so that it facilitates the respective process, rather than sitting outside of it and creating “extra effort”. Such data will then create a win-win-win: (i) It will add objectivity and credibility to performance management internally to legal; (ii) it will enable anyone in legal to talk to the added value that legal provides to the company; and (iii) it will put legal into a position to generate business information right out of legal, information that no one else has.
3.4 Leaders, Roles and Talent
The new era of legal requires new type of leaders. Put simply: the times are over, when the most senior and hardest working lawyer would eventually become a manager and move up the ranks by law of organizational gravitation. The law of organizational gravitation has changed. Leaders must internalize the new expectation on legal, embrace the opportunity that comes with it and lead the team with a strong vision derived from it. Performance management must be part of the table stakes and the introduction of and then the continuous and close collaboration with legal operations will be crucial to master the challenge to scale, perform and motivate the team. The picture of every leader in legal being part of the “C-suite of legal”,[260] creates exactly the right connotation of what calibers are required to lead in the new era.
Hartung and Gartner are very clear about that to: “Whether or not the legal function is managed by a lawyer is not the main point. The proper running of a legal function requires first and foremost structuring skills, then certain (legal, project, financial, economic and all sorts of other) management skills, and the ability to decide on the most appropriate resource for a certain piece of work (or a set of tasks), independent of your own capacity or role.
We do not rule out that lawyers could head-up legal functions, but what they learn and how they think does not make them the first choice for these functions.”[261]Legal leaders must be able to redefine roles and to distill the specific skills required to attract, develop and retain talent. Next to managing performance, it is key for legal managers to understand the potential of a person to actually grow and succeed in this very different and ever changing environment. Fortunately, the modern and much more diverse environment in legal holds a much broader range of roles and opportunities. When formerly there was legal work that could lead to an expert career or a people manager career, today technology, automation, outsourcing and the much closer interaction with the other business functions open up a whole suite of new career paths. Just look at the completely new and highly influential role of legal operations.
LIQUID LEGAL: Change Your State of Aggregation
Panta rhei - everything flows.[262]
The expectation on legal has started to change and has redefined the playing field for our function. Adding value to the business, leading the preservation of business culture by the trust we can derive from the concept of law and justice, and creating the opportunity of win-win in contracts are just a few concepts that illustrate the change. None of this translates well into any stable state, into any traditional concept of “change from A to B and you are done”. Adaptability might be the best term to use, reflecting the constant reshaping that the future of legal will require. The “why we exist” and the “how we do our job” will be subject to constant change. Adding technology and the massive change in the legal supply chain, the description of “what we do” will also need to be re-written consistently.
If that that is what we see, if we look at it as our opportunity to lead, if everything flows: we better change our state of aggregation and become LIQUID LEGAL and—in the spirit of collaboration—continue to share what we learn.
References
Costantini, F. (2016). VOXPOPULII. https://blog.law.cornell.edu/voxpop/category/semantic- web-and-law/. Accessed on 15 July 2016.
Dun & Bradstreet. Whitepaper on setting your data in motion. http://www.dnb.com/content/ dam/english/dnb-data-insight/setting-your-data-in-motion-whitepaper-final.pdf. Accessed on 15 July 2016.
Hambrick, D. C., & Fredrickson, J. W. (2005). Are you sure you have a strategy? Academy of Management Executive, 19(4), 51.
Ismail, S., Malone, M. S., & van Geest, Y. (2014). Exponential organizations. New York: Diversion Books.
Meyer, M. W., & Gupta, V. (1994). The performance paradox. Research in Organizational Behaviour, 16, 306-369.
Rhode, D. L. (2013). Lawyers as Leaders. New York: Oxford University Press.
Susskind, D., & Susskind, R. (2015). Thefuture of the professions. New York: Oxford University Press.
Dr. Schindler is the Head of Legal & Deal Management for Europe Middle East & Africa and the Head of Worldwide Contract Management & Services at NetApp, a leading data management company. He has transformed the legal department by combining Legal and Deal Management including the development of a Deal and Case Management application that supports the working processes and provides legal analytics. His teams have been awarded the “IACCM Global Innovation Award” in 2014 and 2015. Between 2009 and 2016, Dr. Schindler also served as a Member of the Board of NetApp Deutschland GmbH, an organization that has acquired top ranks in the Great Place to Work-ranking in 2014 and 1015. Dr. Schindler regularly presents at both, business and
peer group meetings as well as at various universities throughout Europe on the innovation of
legal and the vision of LIQUID LEGAL.
21Similar to the hierarchical structure of laws (from constitutions down to decrees), the concept of money includes different levels of supply: M0 is the name for the money base, the sum of cash and central bank reserves; on this level, money is closest to its function as concrete payment method.
46See “Servant Leadership” in Wikipedia.
40Pauleau et al., p. 9/10 look at this aspect into the performance perspective: “The legal performance of a company can be understood in two different ways. In a narrow sense, it refers to the performance of its LD, in other words the capacity of that department to achieve its own missions and objectives. This aspect is at the core of the present Chapter. A broader - and perhaps more appropriate - understanding is to see legal performance as the company’s ability to deploy legal