In this three-part series, HBR Consulting will offer perspectives and strategies around better aligning your law department with the strategic goals and objectives of your company as a whole. This first article will focus on the “why,” touching on the importance of strategic alignment, and some of the key drivers behind an increased interest from both inside and outside the legal department on getting this right. The next two articles will dive deeper on what the key aspects of alignment are, and the tools and strategies to achieve that alignment.
Alignment: What does it mean and why does it matter?
There have been many articles written in the post-2008 recession era highlighting the internal pressures law departments are feeling to catch-up to other departments in operational efficiency, and the focus on running more like the rest of the business. This often involves examining internal and external spend, as well as the resources and infrastructure supporting the department. One of the main questions we ask clients is to ask themselves, “Do we have the right number of people, in the right areas, doing the right things?”
Oftentimes, when evaluating internal staff and structure, law departments mainly focus on “the right number of people” while paying less attention to “in the right areas, and doing the right things.” The challenge our clients face is that there is not a clear definition of what the “right areas” and “right things” are. While these will vary from department to department, how you get to that definition should almost always be the same. The “right areas” and “right things” should be defined based on the strategic goals of your department, which should directly align with the strategic goals and objectives of your company.
As organizations have become less siloed, many general counsel find themselves spending as much time, or more time, with executives and leadership team members outside of the law department as their own team. At the same time, there is a growing expectation from law department clients that legal involvement in business unit activities shift away from a more traditional reactional and transactional check-point in the workstream, to a more proactive business partnership. In our law department client surveys, one thing we hear over and over is the desire for a tighter, more forward looking relationship with the law department. Business units are looking to their law department partners to help them shape the direction of future initiatives, with an eye on the potential risks, while at the same time balancing the potential business impact. The business is looking for a trusted proactive partner.
Looking outside the CEO’s office
The first stop in determining corporate goals and objectives should be the office of the CEO, but it should never be the last. Law departments should work to identify the key business units within their organization (those departments that are key to driving growth, as well as those exposing the organization to the greatest legal and business risks), and work with the leadership of these units to determine their short and long term goals and objectives. Additionally, as the law department better aligns with its core business units and the office of the CEO, it will find itself in a position to interact with and better understand the clients and business partners of the company. The law department should be looking at ways to simplify and strengthen its relationships to help drive those aspects of the business forward.
A healthcare client of mine went through an evaluation of their alignment with their key operations teams. Through this process, they realized that one of their organization’s major focuses over the next three years was expanding and strengthening their joint ventures with doctor groups across the country. A series of interviews with existing partner doctors revealed that legal was seen as the biggest hurdle in getting the deals done, and if they had to do it over, their experience with legal might make them reconsider. A deeper dive identified the key issues in legal’s process and approach, and major changes were made that simplified the process, shortened deal time, and improved legal’s image as the trusted business partner.
In addition to getting to know your business units and your organization’s clients and partners better by being part of the decision making process at the earliest stages, one often over looked benefit of strategic alignment is that it places the law department in a position to reduce overall risk, and potential future litigation. As the department becomes more strategically aligned and better in tune with the future direction of the organization, they can stay on top of the changing rules and regulations, and help their clients stay ahead of potential issues.
Remember, when it comes to determining if your legal department “has the right number of people, in the right areas, doing the right things”, the first step is to determine the strategic goals and objectives of your company and its clients and partners, and to develop an internal strategy that aligns the law department’s resources and areas of focus accordingly.