Based on my experiences working with GCs and boards I see three challenges confronting law firms selling to law departments:
- Variable relationships with “the business”:
- the relationship between Legal and “the business” is frequently (tho’ not always) fraught which frustrates the ability of providers to do their best work
- Leadership skills:
- leadership skills are not valued in law school and in the training of lawyers resulting in a cadre of excellent lawyers at the top of law departments who – with notable exceptions – don’t know what they don’t know about leading and managing which in turn prevents law firms from doing their best for them and for their organisations
- Deepening mis-alignment of regulatory context:
- the regulatory context in which in-house lawyers operate is based on a “whistle-blower” model instead of robust support by the regulator of in-house lawyers under ethical pressure resulting in a disconnect between what law departments and businesses need to avoid risks and what providers can deliver evidenced by a growing body of academic research and recent corporate risk events. This disconnect is becoming more acute with the increasing pressures on GCs, for example, to advise on ESG matters at a time of pandemic. Many GCs acknowledge privately that the system is broken but feel helpless to change it. Law firms could benefit now from choosing to help resolve the dysfunction. As things develop they may have no choice or be left behind.
What if a legal services provider could be an agent of reinvention in the legal services market by helping to address these challenges?
Beyond the rhetoric, no provider is currently meeting all needs. A critical absent component is support for GCs to reframe their personal leadership purpose as CEOs of an internal break-even business.
What if this reframed leadership purpose could anchor a transformed operating model for legal services?
The problem with current provider benefits
The problem with the benefits law firms currently offer is that the benefits they provide are difficult to differentiate from the competition. They fall foul of market dysfunction which chokes off opportunities. For example:
- Improving efficiency
- Legal and “the business” often disagree on what efficiency means
- Mitigating risk
- “The business” sees anticipating and mitigating legal risk as the responsibility of Legal alone. It may reasonably view risk as a joint responsibility
- Controlling and predicting costs
- Legal may fail to communicate value for money because they are not trained in internal value-for-money communications. They become targets as poor cost controllers.
- Reducing operational costs
- Legal may fail to connect its spend to strategic outcomes and allow itself to be boxed into a corner on “doing more for less” when sometimes they need to spend more, not less, to achieve those outcomes. For example, Legal and “the business” can agree on reducing contracting costs but how does Legal sell in a case for spending more money on “conduct risk” defined as behaviour over time and which can bring a company down?
- Improving delivery of enterprise services
- This is the area of most improvement in recent years but even enterprise delivery can be frustrated if the role and purpose of Legal in the organisation is not clear and shared.
- Cultivating critical insights
- Dashboards have improved but Legal’s ability to make informed decisions based on them vary considerably depending on the alignment between business purpose and Legal’s purpose
- Increasing business collaboration
- Successful cross-functional collaboration depends on high EQ skills. These vary considerably amongst in-house lawyers.
I’m sure your law firm is different but…
I’m sure you believe your law firm is different to other providers in how it deals with these barriers to increasing take-up of your services but there is an opportunity for your firm to create bespoke solutions.
EY Law’s 2021 Survey states that “ …General Counsel are aware of…challenges with only 52% reporting that their department’s day-to-day work is aligned with the broader business strategy…Thirty per cent are considering creating a co-sourcing or outsourcing relationship with a third-party provider to manage parts of the legal function. This alone demonstrates that there is no one-size-fits-all route to transformation”.
If there is “no one-size-fits-all route” then it follows that if your law firm could overcome the barriers to providing a bespoke route to transformation faster and better than anyone else then you would steal a march on your competition.
A New Way. Your law firm’s way.
The full range of your law firm’s current specific capabilities can be called into service in this journey to offer a bespoke service. In addition, to crack the code of transformation fully your law firm will need to incubate critical missing capabilities:
- to engage with individual GCs on a bespoke basis on their personal leadership purpose, strategy and behaviour in respect of running Legal as CEOs of a break-even internal business. This legal business will in turn need to develop the confidence to tell, not ask, “the business” what it needs in terms of excellent legal counsel and process to achieve its strategic objectives.
- I have developed and tested a 7-Step In-House Target Legal Operating Model (In-House TOM) which I have piloted successfully, a leadership model tailored to GCs and a facilitation process for boards and GCs as advisers of boards to reframe their decision-making processes in light of the new ESG environment.