Legal departments have traditionally operated at their own pace, managing legal risks and transactions and generally serving as a business enabler. Legal is also tasked with the important duty of protecting the company against risks and is staffed with highly specialized individuals. Until recently Legal was hardly ever faced with requests for broad transformation initiatives or cost cutting exercises. Today, General Counsel are under pressure to catch up with the rest of the business when it comes to service delivery, processes and capabilities transformation. They are being asked to contain costs and deliver a higher level of efficiency, insight and partnership to the business. And that will most likely require a change in the way Legal delivers its services.
According to the General Counsel attending the Roundtable sessions of the ‘Legal Operating Model’ during the annual conference of GCN, GC face many challenges nowadays:
- Pressure on the legal department; the pace of the business increases and subsequently the need for immediate action from the legal counsel (“If I needed your advice tomorrow, I would have asked for it then”)
- Impact of new technology in the business of the company is severe and therefore assistance from the legal department is asked in topics like data protection, privacy, intellectual property
- Risk management – the claim culture is changing and managing risk, and especially reputational risk, is high on the agenda
- Making the business aware of the legal consequences of their acts, e.g. train colleagues outside the legal department in legal issues is crucial
- Embracing new ways of working and the use of technology means that roles and responsibilities are changing and therefore the diversity in a legal team needs to be looked after
- Globalization and increased regulations requires increased cooperation with other departments, like tax, finance and IT
- Use of legal technology
Organizations are expecting their legal departments to bring more value to the business – from a strategic as well as operational perspective. Yet the growing number of regulations to address on a worldwide scale amid declining staff numbers and resources make it challenging for legal departments to live up to those expectations. A holistic approach of the legal department is needed to get a broad view of the legal services required and the legal department within an organization. That being said, the need to transform is becoming increasingly clear in an environment in which all functions, including legal, are being asked to do more with less.
Start with Strategy
Today, more than ever, GC’s are expected to create a service delivery strategy for their department to not only deliver top-quality legal services but to do so in an increasingly cost-effective manner. The setting of your strategic direction should be in line with the wider strategy of the business, and encompasses the specific strategy for the legal department, the governance framework required to ensure that legal operations comply with the strategy and the roles and responsibilities of those that will be delivering on that strategy.
While it may seem obvious, it can be easy to lose sight of the fact that service delivery is about delivering services to people. What do they really need? Where is the current approach missing the mark? What would make their jobs easier? This is the perfect opportunity to simply ask the internal consumers of your services these questions (and many more) and then use their insights to drive your approach.
Map your processes
Many GC’s do not often think of their organizations in terms of process flows – an approach that comes naturally to more process-oriented parts of the business, such as the supply chain organization. But the same level of discipline is needed to change Legal. Take a closer look at the people in the organization, the processes they follow, what bottlenecks exist, and more. A granular understanding of these issues can be instrumental to reshape the Legal department successful.
Sourcing strategy in place
Legal departments typically source work at virtually every level – not just lower-level tasks. For example, high-level specialized work may be sourced to more costly outside counsel law firms, while more of the repeatable, transactional work may be delivered through a lower-cost legal process outsourcer (LPO). This presents unique opportunities and needs for Legal. There are likely many opportunities to put shared services strategies to work today in order to make the Legal department and the business more effective.
To transform your business, review your operating model
The reality is that legal operating models have always been there, whether people are conscious of them or not. In order to respond to all the challenges a GC faces nowadays, it is helpful to have a thorough understanding of the legal operating model in place, whether it appropriately responds to the requirements of the rest of the business and whether it is as efficient and effective as it could be. A thorough review of the model can highlight priorities for change or sometimes even the need for a complete transformation of the legal department.
About the authors:
Bernard van der Voort, Corporate Director Legal Affairs Royal HaskoningDHV and Chris de Jong, Managing Partner Deloitte Legal moderated the Roundtables on the Legal Operating Model during the General Counsel Annual Conference 2017.
