Creating value in your business — How are in-house legal teams approaching value creation?

Creating value in your business — How are in-house legal teams approaching value creation?

Creating value in your business—how are in-house legal teams approaching value creation?

Building on the success of our session on managing in-house counsel’s relationship with law firms, which included discussion on what value general counsel should look for in firms, the latest session in our series of Senior Counsel Virtual Sessions focused on creating value within their organisations.

Sophie Gould from Flex legal introduced us to our speakers—Lucy Beaumont, General Counsel at Unilever UK and Ireland, Leigh Kirkpatrick, Managing Legal Counsel, Outsourcing, Technology and IP at Royal Bank of Scotland, and LexisNexis’s Mark Smith, Market Development Director. We were also excited to be joined by our partners from Radius Law and Crafty Counsel

The session allowed participants to share their thoughts on value creation, as well as providing insight into LexisNexis’s new report: Making the intangible, tangible — How legal teams are approaching value creation. We also heard from our guests on value creation in their organisations and the way forward after the pandemic.

As always, we kickstarted the session by asking participants to share their thoughts through our slido polls. From these, we saw that many participants believe the one thing they do in their business which creates most value is managing or minimising risk.

 

 

Mark noted that, although there is a core focus of managing risk, these responses reflect the fact that in-house teams are involved in a broader commercial context, which may be subtly different to how it would have been five to ten years ago.

Introducing the Value Framework for Legal Teams

LexisNexis commissioned Cranfield Business School of Management, working with Dr Paul Hughes, now Director at Center for Creative Leadership to research what creating value really meant for in house counsel a few years back. They developed the Value Framework for legal departments, containing five key value activities. The findings can be read in the LexisNexis In-house Insights report: When being a good lawyer is not enough: Understanding how In-house lawyers really create value.

Using these metrics, Mark asked participants to rank five value creating activities in terms of firstly, how important they are to counsel’s business and secondly, in terms of how much time our participants spend on them. These activities were:

-          The Skilled Lawyer

-          Reducing the cost of service delivery

-          Providing a service that reduces organisational loss of margin

-          Providing a service that contributes to greater overall value of organisational service

-          Being an ethical champion for the business

 

 

Mark noted that, interestingly, the activity which correlates most closely with ‘managing risk’— ‘providing a service that reduces organisational loss of margin’—was not at the top of our participants’ list of the importance of these value creating activities for their business. He recognised that many of these factors are co-dependent—for example, if you are not a skilled lawyer you would not be able to create value through the other activities.

A shift in activities that deliver value

Mark gave us greater insight into the most recent LexisNexis In-house Insights report “Demonstrating value – making the intangible, tangible” on approaching value creation.

Following the original research, LexisNexis commissioned a further extensive in-depth market study, which surveyed 330 in-house legal professionals. Among other things, the report looked at what different capabilities are now required to truly create value for organisations. Key findings included:

  • Legal is becoming a strategic asset, not just an assurance function with higher representation at Board level and being more involved in ‘non-legal’ matters
  • There is a seismic shift in the expectation from business that the legal function will contribute to successful commercial outcomes in addition to wielding a deep understanding of the organisation. Over three-quarters of in-house lawyers surveyed actively look for ways to drive revenue opportunities, more than two thirds having business-related financial KPIs
  • Cultural change is afoot. Gone are the days of straightforward tick-box compliance; a more proactive, holistic approach to legal risk management is emerging where protection of brand reputation is a primary way to add value alongside the promotion and embedding of ethical behaviour in an organisation
  • There is a greater focus on metrics and on communicating the value that legal departments deliver
  • Cost of service delivery remains an important value driver. Most legal functions now have a sophisticated, structured approach to external firm management, including working with ALSPs
  • Innovation and focus on productivity within legal departments continues to grow in importance with increased investment in appointing a representative responsible for legal operations teams as pressures on improving efficiency and productivity continues

He further highlighted that a new challenge the in-house community is now facing is strategic drift—whereby the organisation creates a strategy but the environment is moving faster than the strategy. In practical terms, changes in the legal industry may in certain instances be outpacing what in-house counsel are doing to keep up with them.

Time to stop firefighting

After presenting the report, Mark led us back to the here and now, sharing his thoughts on key focus areas for businesses. He feels that it is now time to step out of the ‘firefighting’ approach businesses have had during the pandemic and to ‘zoom out’ to consider longer term plans.

Exploring the topic of what legal teams had been doing to create value during the past year, discussion highlighted that, even prior to the pandemic, some legal teams had recognised that the business wanted to work differently. For example, they were seeing a shift away from the traditional role of a business partner having one distinct function. The pandemic moved this trend forward very fast and that, in practice, the legal team added value to these changes by, among other things, working on flexible resource models.

For others, although there had been a huge spike in certain areas of work, some legal teams tried not to let the pandemic shift attention too much, remaining focused on longer term improvements for the business. This approach positioned them as a proactive legal team, who were able to acknowledge that processes could continuously be improved.

In terms of what legal teams thought their businesses were going to need in the future that is new or different to previous areas of focus, discussion highlighted the impact of business leadership and relationships outside of legal.

For example, a new CEO is in a position to set out a new strategy e.g. focused on building a purpose-led organisation. This can mean including areas of focus, such as influencing stakeholders to be better in the climate space, which may traditionally not have been important to general counsel.

Others highlighted how the pandemic enabled their teams to have more conversations with the business, such as discussing which smaller tasks could be outsourced, letting the team focus on big picture projects where they could be adding significant value. In this way, they felt the pandemic can be used as a springboard to influence future strategy.

How can you create added-value?

A key feature of our in-house counsel sessions is enabling lawyers to share best practice on various challenges they face. Mark launched the discussion, asking participants to consider:

If you had an extra day a week to create value for your organisation, what would you do?

In breakout rooms, participants shared their thoughts under Chatham House before coming together to share peer insights. A few interesting ideas shared included:

-          Using it to spend time on legal operations and enhancing legal tech

-          Creating more training and education for business colleagues—with the idea that this would get rid of lower level work

-          Contract management—using the time to put more systems and structure in place

-          Using it to work with other parts of the business

-          Use it for thinking time

-          No matter what you choose to do with that day, keep it secret!

Upcoming Senior Counsel event

Join us for the next dedicated session for in house counsel:

Your essential regulatory and commercial news update: Brexit, COVID-19, Data Protection and more

Wednesday 26th May, 10:00 – 10:45

Register today

Iain Larkins, Founder and CEO from Radius Law and Sandra Martins, Head of Employment will highlight the key priorities for legal departments from recent government and regulatory guidance updates and recommended practical next steps to consider. Including Brexit and COVID-19 Stop Press alerts and how to prepare for the outcome of an adequacy decision.

 

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About the author:
Gloria is a Paralegal in the Lexis®PSL Paralegal Hub. She graduated in International Law and Globalisation from the University of Birmingham in 2019 and has been at LexisNexis UK since March 2020. She has experience working for US, UK and Italian law firms on a range of matters, including IP, financial services and immigration law.