It’s no secret that many law departments struggle to attain business alignment. Internal assessments and client satisfaction surveys reveal the difficulty in moving from providing reactive legal services to a business aligned law model. Many law departments have been able to make significant progress in positioning the law department as a strategic business partner. These law departments have elevated themselves in the eyes of the C-suite and business leaders as being well-aligned to the corporate interests. Many general counsels have asked, “What does it take to more closely align my law department with the business?” Here are the top four characteristics of well-aligned law departments.
1. Active engagement: To achieve alignment, you need to understand the business’ strategic intent
Well-aligned law departments recognize the importance of knowing and being engaged in the business. Lawyers are actively involved in monitoring and managing client strategies and business plans. The lawyers have a seat at the table early in the process of defining new business ideas. The lawyers are physically present at all strategic business meetings and are mentally present by constantly asking, “How can we accelerate the revenue-generation business goals?”
2. Solution orientation: If you say “no,” pose feasible alternatives
Even when they are actively engaged, well-aligned law departments will still be faced with instances where the legal or regulatory risk cannot be fully mitigated. Without providing feasible alternatives, the business executives may try to work around the lawyers rather than with them. When the plan is one that has the potential to generate significant revenue, the law department can be seen as a sales prevention department rather than a strategic business partner.
Well-aligned law departments counsel the business by developing viable legal-business alternatives that appropriately manage the identified risks. “Have you thought of promoting the service this way?” “Have you considered manufacturing that component in Country B to circumvent that unexplored regulation in Country A?” Armed with their heightened business acumen and legal knowledge, well-aligned law departments help craft creative solutions. They do not wait for the business to come up with revised plans; they are actively engaged in helping to identify and define and feasible alternatives.
3. Efficient business management: Strive for efficiency and continuous improvement in the business of law
Well-aligned law departments realize that the business expects them to be as efficient and business-minded as any other corporate function. They identify possible efficiency improvements in legal services and initiate action plans to make necessary changes. Well-aligned law departments ask, “how can we speed up the process while maintaining or improving quality?” They understand that time delays and operational inefficiencies can lead to costly missed opportunities. There is a direct correlation between the speed of delivery of legal services and client satisfaction scores as greater responsiveness yields higher client satisfaction.
In order to achieve these efficiencies, well-aligned law departments strive to improve their department operations and processes. They leverage existing or new legal technologies to help make better business decisions. They are proactive in providing client training. They accelerate junior lawyers’ legal and business skillsets and improve attorney engagement by creating cross-practice, cross-business and geographic rotational programs.
4. Financial discipline: Be transparent with internal and outside counsel costs
With the continued focus on cost control, well-aligned law departments provide the business with greater insights into the source and drivers of legal spending. Client satisfaction takes a serious hit when unexpected outside counsel costs show up on a chargeback report. Well-aligned law departments excel at communicating the legal plan, timing, outside counsel budget and the difference in roles between inside and outside counsel. With improved analytical tools, lawyers can walk into a room with business leaders armed with data that supports current legal spending trends, identifies issues and litigation root causes. This level of financial insight can quickly turn the focus from why something costs so much to how to prevent litigation at its source. While most law departments strive for better alignment, certain roadblocks may exist.
A myriad of reasons can prevent a law department from becoming well-aligned— among them, lack of business or industry knowledge, a siloed department culture that encourages forum shopping, and inefficient processes. The two most significant alignment roadblocks are understaffing and misaligned organizational models.
- Understaffing: Many law departments are struggling to handle existing day-to-day legal matters with their current headcount. Given resource constraints, these law departments may not have the capacity to attend numerous business strategy meetings.
- Different models of organizational structure: Law departments can be organized functionally, geographically by business unit, topically by practice areas or by a hybrid model. Meanwhile, many businesses are organized by products/services or countries and regions. When a cross-business product covers multiple geographies, collaboration and legal/regulatory issue resolution is a struggle. Sometimes the biggest roadblock to alignment is the business not knowing which lawyer to call--business, function or Regional lawyer.
Conclusion: The pivotal question
Given these expectations, how does your law department compare? A critical first step is knowing what your business clients think of your current level of alignment. This often involves interviewing select business clients and reviewing the results of any pre-existing or current client satisfaction surveys. Consider this pivotal question: When formulating business strategies, does the business want more or less involvement from the law department?