The skilled lawyer
0% of in‐house counsel thought that investment in non‐legal skills will enable legal department to provide more effective advice. 9 in 0 cited reduction in risk and 8 in 0 improved business relationships as expected benefits.
There has been a shift in emphasis of what makes a “skilled in‐house lawyer’ with more focus on commercial and technological acumen.
The Value Framework identified high‐quality legal expertise as a “given” — determining that the lawyers that added the most value were those who demonstrated both legal and commercial competence.
“Even those who demonstrated just a small amount of capability in the Business Expertise dimension could add much more value than those who only focused on the area of adding value through legal Expertise”.
LexisNexis In-house Insights Report, “When being a good lawyer is not good enough”.
Cost of service delivery
“Value with external suppliers is about cost, quality and delivery. But we must be clear what we want from them and give good instructions. You’ve got to know whether you need a Rolls Royce of a more Ford Focus approach”
A third consider cost reduction to be one of the top three value‐adding behaviours, with large teams more likely to rank it highly than small teams. In‐house counsel in large organisations were twice as likely to rank it in top position.
However, general counsels valued ALSPs higher for work to fill resource gaps i.e. high volume repetitive work (0%) and project‐based initiatives ( 0%) than legal ops professionals (0% and 35% respectively), who contributed higher value to the work completed by law firms.
Three quarters of respondents also support broader collaboration within their organisations through relationships beyond the legal department. This manifests more with in‐house counsel in large organisations than in small ones.
Reduce margin loss
0% of in-house lawyers cite the protection of brand reputation as a key to how they add value.
Creation of value goes far beyond simply providing legal services at the lowest cost. It’s about creating outcomes where larger costs are saved, typically by safeguarding the company and its commercial interests, protecting its reputation and effectively managing legal risk.
Small teams are more likely than their larger counterparts to consider the reduction of legal risk as one of the most important value‐adding behaviours. 0% of small teams (versus 0% of large teams) rank it in the top three ways to add value.
“When it comes to the risk appetite of the business...
It is essential that in‐house actively influence the risk appetite.”
Reducing Legal Risk: Practical Peer Insights
- Learn and understand: Conduct a legal risk audit at least twice a year to ensure you have a thorough understanding of the business and the possible risks.
- Stay up‐to‐date: Review — at least quarterly — that risk is classified appropriately against the risk appetite of the business and that there are relevant solutions and next steps to manage it.
- Communicate clearly: Put in place and actively review clear processes and mechanics to communicate the levels and impact of risk to business stakeholders.
- Educate the business: Regularly review policies, playbooks, and training for business colleagues on the risks and how to avoid and manage them.
- Stay informed: Subscribe to risk updates and regulatory scanners to ensure the legal function is appropriately informed of any changes in the legal and regulatory environment.
“In‐house counsel must think about law and risk in a way that the rest of the business thinks about it. That is in the context of numbers and finding solutions.”
0% of in–house lawyers in large teams have clear processes and mechanics to communicate levels and impact of risk to business stakeholders. However, 1 in 5 in–house lawyers in small legal functions believe such processes are lacking.
0% of in-house counsel at large businesses cited having a business-related financial KPI.
“The best type of demonstrable value is where the input of legal directly results in delivering revenue and extra cash to the business. This could be through exploiting regulatory opportunities, identifying ways to work in industries you know about which the rest of the business does not, or even influencing the law.”
There is an expectation from the business that the legal function will contribute to successful commercial outcomes and will be deeply engrained in the business objectives.
There has been a seismic shift since we first developed the Value Framework. Where this activity was the least common previously, now over three‐quarters of in‐house lawyers actively look for ways to drive revenue opportunities.
Value through collaboration: Practical Peer Insights
- See the big picture: Get a clear vision and definition of business strategy and determine how legal fits within it.
- Get to know the business: Develop relationships and align with the needs and issues facing other departments.
- Be an ambassador: Represent the business as part of the business — not as an adjacent adjudicator — when interfacing with customers.
- Advocate for the business: Lobby regulators and governmental bodies on the industry issues.
- Take the lead: Guide the team of non-legal projects that impact on the strategic direction of the business.
- Share best learnings: Offer up sector and industry dynamics in order to influence organisational strategy.
In the Value Framework, the pinnacle of how value can be added by the in-house legal functions is where the activities of the legal function lead to the organisation being able to deliver a higher value outcome itself. Leading to higher revenues if it’s a commercial organisation, or reputational value if it’s a non‐profit. In‐house lawyers who add value in this way have the highest levels of influence in the organisations in which they operate.
The Value Framework created in partnership with Cranfield Business School of Management, identified a fifth and final way legal departments can create value in their organisations namely providing the corporate legal conscious — or being the “Ethical Champion”. This activity less clearly defines cause and effect in creating value but is viewed very positively by those inside organisations. It is seen as a quality that helps ensure less short term thinking in organisations, greater objectivity and maturity in decision making.
Protection and promotion of ethical principles: Practical Peer Insights
- Set up an ethics committee: Cross‐functional team with both an advisory and educative function to proactively consider ethical issues which may fall foul of the urgency bias in the day to day.
- Put ethics on the Board agenda: Add an ethical angle / propose ethical dilemma in a stakeholder and Board meetings to discuss how the situation would be addressed in reality.
It’s clear that value‐adding behaviours are both more important and under greater scrutiny than ever before. But how do legal teams judge whether they're using these behaviours effectively?
General counsels did note with caution that while metrics and tools are helpful, they can’t be used indiscriminately. “Before you can even get into demonstrating value for the business, you must have a very clear idea about what the purpose of your legal function is, and that has to be agreed with the CEO and the wider board. Everybody has to be on the same page,”
Metrics are a powerful tool. They allow in‐house teams to tangibly communicate how they create value to the wider business and streamline processes to directly and positively impact the legal team’s performance and working practices.
Legal teams are increasingly using metrics to give form to sometimes elusive concept of “demonstrating value’ with most using activity based metrics such as matters and contracts reviewed and concluded.
The power of data: Practical Peer Insights
- Start at the beginning: The purpose and role of legal needs to be clear from the outset (and agreed upon by the business) in order for you to determine which metrics to use.
- Ask the right questions: What’s the objective? What are you trying to show? What do you want this data to support? How would that satisfy the overall objective? Be selective — measuring everything doesn’t add value, but can obscure it.
- Look beyond legal: To add value, you need a broad perspective, so consider data at an organisational level as well.
- Be prepared to change: When you start to use metrics, you need to make the relevant changes to how you work based on the insights you gain from the data.
It’s clear that the in‐house teams best able to articulate their value are those with a clear purpose — one that is agreed upon and linked to their organisation’s overall strategy and aims. Here are our five key practical recommendations.
How to deliver and demonstrate your value
The first step is to learn, understand, and align with organisational strategy. The better you understand the organisation’s needs, the better you can function.
Armed with an understanding of the organisation’s objectives, identify the pain points and explore the best solutions. Would the matter be best handled in-house or by external suppliers? Is there a tool that could help?
Matrixed project management is increasingly common. Encourage open behaviours and use the unique view of the legal team across the business to increase collaboration both within the organisation (by bringing key stakeholders together early and frequently) and across the legal supply chain with external providers to showcase the value of legal.
With a plan in place to address the pain points, zero in on the “what” and “why” of what you want to measure and then work out the best metric to employ. Review this regularly with the team and the wider organisation.
What’s required of the team will continue to shift and change. Stay ahead of the curve and monitor the team for any skills and competency gaps and prepare for how those can be managed — either through training or hiring — to continue managing rapid evolution of the legal department.
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