General Counsel: Reluctant business unit leaders?

General Counsel: reluctant business unit leaders? 

Speech to Members of The Association Of Corporate Counsel

ACC Europe Annual Conference, Munich

1st. June 2015

Ciaràn Fenton

Leadership & Change Consultant

Why in-house lawyers are changing their behaviour

Many legal functions are changing how they operate. We all know why. The strategy debate has been done to death. Forward-looking legal functions are focusing resolutely now on action and change. If change isn’t seen as an opportunity, it becomes a burden.

But what are the professional and personal benefits of all this change? What would motivate senior lawyers to get behind the transformation required? Sandy Toksvig, the British-Danish comedienne jokes: “the problem with transformational change is that it suggests ordinary change has no change in it whatsoever”. Lawyers need to change their behaviour in order to bring about the transformation that the business is seeking in the operation of Legal functions. But why should they? The answer depends on whether you are a lawyer leader, or a lawyer follower.

What should lawyer leaders do?

Lawyer leaders, like all business leaders, should do three things: they create an environment in which people can do their best work; they grow and develop their function/organisation; and they deliver a return on investment. It’s as simple and as difficult as that. Legal functions are looking broadly at three ways to respond to the complex internal and external environments they face: they are looking at running Legal as a business or at least at some level of internal structural reform; they are addressing the quality of conversations and their relationship with “the business”; and they are trying to manage or eliminate risk differently, mainly by focusing on the future as much as on current rules.

What does “running legal as a business unit” mean

Running Legal as a business unit means firstly accepting that Legal is providing a service in exchange for salaries, some of them not insubstantial, as well as “soft” benefits for the Legal team. It’s a contract even if not a written one, although increasingly Legal functions are agreeing SLAs with the business. Secondly, it means running it like the business runs itself and like all businesses must be run, that is with input from the key disciplines: Finance, Internal Marketing (not just Communications), and IT as well as Operations. Thirdly, it means accepting that the GC must behave like a business leader in every respect.

What might motivate lawyers to change?

Firstly, running Legal as a key business unit will go a long way to removing the fudge that resides within many legal functions and teams. By that I don’t mean as a profit center but providing value for money in a measurable way – open to scrutiny and challenge so that they can perform effectively. Many GCs don’t control their own budgets and resources, yet they are responsible and accountable for outcomes. Business plans and detailed budgets give lawyer-leaders control as well accountability and this control ensures value is added. This will reduce stress and frustration and is a significant personal benefit for the lawyer leaders themselves.

Secondly, an internal Legal business unit, which demonstrates rather than asserts value to the business by using its own internal marketing function, will be in a much better position to negotiate a realistic deal with the business. Legal should, say, tell the business it needs seven things costing seven pounds, euros or dollars and should do so in a way which makes the business really understand the value of that proposition. Then, if the business says it has only five pounds, euros or dollars, Legal is in a much stronger position to negotiate and indeed advise on which two things the business must drop. This will help avoid the “diving catch” so endemic, if understandable, in the professional behaviour of lawyers. It will help them say “No” to the business safely, surely an incentive for lawyers who are regularly exhausted from saying, “Yes.”

Finally, drawing on well established psychology theory, running Legal as a business unit should restore the nature of the relationship between GCs and the business to an Adult-Adult mode, from a Parent-Child mode. These terms are from the theories of Transactional Analysis in psychology. The ability to build Adult-Adult relationships is a key indicator of high emotional intelligence. This really matters in managing future risk because the problem is, as one GC said to me, “it’s easier said than done to speak up at the table”. When I heard this first I was shocked but now I believe that diffidence in dealing with the business is much more prevalent than many lawyers, particularly junior ones, acknowledge.

Running Legal as a business unit can ensure equality in the relationship so that lawyer–leaders get to know and understand the personalities in the business better. I am convinced that these changes should make a significant difference to the function, the business and to the personal satisfaction that lawyer-leaders get from their work, but I’m not saying that these changes are easy to achieve.

The lawyer’s mind-set under pressure

Lawyers are not trained to consider issues in a non-legal way or to prepare for consequences outside their expertise. They see their role as traditional advisers to those who do not have their expertise. This mind-set is now under pressure. The global financial crash, increased risks, liberalisation of legal services and the impact of IT have changed the role of in-house counsel beyond recognition. They have new sources of external support from so called “new law” providers and they have stronger bargaining power externally. They are now required to be more commercial, get closer to the business and predict risks. Their roles are much wider and they often sit on Executive Committees.

But they also lead and manage legal functions. Many of these are sizable businesses in their own right. They are de facto business unit leaders of internal professional services firms. Lawyer leaders might understandably see this approach as a constraining construct. It doesn’t sit well with them. They may even view it as a simplification provoking them to behave like reluctant business leaders.

Reluctant business unit leaders

I say reluctant business leaders because it’s a different type of contract requiring them to think, feel and act differently. They are expected to run their legal functions by applying their skills that rarely include training in business. Few if any went into law to lead and manage legal functions. They see non-lawyers as business people who do not necessarily share their professional viewpoint, values, standards, duties and responsibilities. They think differently to non-lawyers and approach matters in a different way. Therefore they engage with  “risk” differently. They are lawyers not business people and they are vulnerable internally and externally to criticism and/or sanction for not advising the business appropriately.

 

The business needs in-house lawyers

Yet their legal mindset is essential to “the business”. It needs them to help address the huge changes that are constantly imposed on it in very complex trading environments. Non-lawyers know that they don’t think like lawyers. They need in-house lawyers to help them with issues that, for lawyers, are not at all impenetrable. They have the benefit of internal knowledge that an external counsel does not have. They are not advising in a partial factual vacuum. They know the people and the politics. External counsel would love to have this insider knowledge. The more knowledge in-house lawyers have of the business, and the decision makers in it, the better placed they are to make recommendations. The Legal function should make much more of this fact in its internal marketing than it does currently.

But the business needs more than good counsel and foresight on risks. It also needs lawyer leaders to lead and manage complex legal functions that deliver legal processes, as well as good counsel. As a support function Legal has to operate as efficiently as the best Finance, Sales, Marketing, Operations, and HR functions particularly in the way in which it manages its relationships with the business.

The problems in relationship management

Managing the relationship with the business is one of the main problems encountered by in-house lawyers. The reason for this is not just because of a lack of training in business. It is also because their legal training absolutely requires them to remove emotional factors from their decision-making and often in their behaviours. But since high emotional intelligence is an essential ingredient of leadership especially, in the 21st Century, lawyer leaders face a challenge for which they have not been adequately prepared. Indeed it might be argued there is a gap in their curriculum at law school. It’s like being sent to play cricket with a broken bat, as a British politician famously observed, in a different context. They are trained in an adversarial system. This works well for lawyer followers, but not in lawyer leadership, where collaboration is essential.

Does this mean that lawyers lack emotional intelligence? No. Does this mean that they have been required to suppress the development of their emotional intelligence in the service of becoming excellent lawyers? I believe so. The answer therefore must lie in the voluntary lifting of this internal suppression for those who want to lead legal functions. Does this mean that their skills as lawyers will be adversely affected? No. It’s just that they have to accept that they can’t be as hands on as lawyers as they used to be.

The dilemma facing lawyers

They are not alone as professionals in facing this dilemma of leaving much-loved professional work behind. But the problem they face is that there is no career structure for those lawyers who do not want, or are unsuited, to leadership roles. Getting to the top means having to lead. But there are alternatives. There are many instances of highly skilled talented people in sport and the arts voluntarily being managed and led. Indeed many of the top consultancy firms now operate these models. Is there any reason why this cannot be replicated by Legal functions?

In addition, partners in private practice, engineers, accountants and doctors who accept management and leadership positions have to practice less and lead more. If they don’t, the business suffers.  But the decision to lead is a big one. The benefits are exciting and rewarding but there are costs too. In the past the best lawyers were often promoted to leadership roles without having to confront this dilemma properly. Now there is growing pressure for them to do so. There is no easy solution to this. In-house lawyers must make a decision: to be lawyer leaders or lawyer followers. This isn’t optional. The status quo is not sustainable. A lawyer leader has no option but to embrace and indeed value the art and science of business leadership because he or she is, in fact, running a business. If they don’t, they risk being marginalised.

 

How in-house counsel could be marginalised

Becoming a lawyer leader requires a step change in the structured widening of their counsel to embrace non-legal issues. But in widening their business perspective they don’t want to fall into the trap of being used, or even scapegoated, by non-lawyers as some form of internal insurance policy. They need to feel that they are, in effect, advising colleagues because they are part of the business, not remote from it.  It is not “us and them”. They are the only part of the business that has the expertise to see the whole picture. But if they try to keep their heads below the parapet and limit themselves to being an internal insurance policy and ignore their access to full information, they are voluntarily minimising their role and influence in the company and so what is the point of them? Why not go the whole hog and pay external counsel for that advice?

Of course in-house counsel are familiar with all of these arguments and also with the complaints against them. Some leaders from “the business” complain that they are not pragmatic, lack commercial nous, fail to look ahead, remain distant, lack visibility, cause frustrating delays and of course, are very costly. Above all, the business asks, why don’t they fully exploit their advantageous position of full information?

My proposed solution 

Apart from fixing what’s wrong with law schools in training lawyer leaders, I believe that the solution to this problem lies in adjusting the personal purpose, personal strategy and personal behaviours of lawyer-leaders and, at the same time, adjusting the organisational purpose, strategy and behaviours of the legal function to acknowledge these realities. By this I mean that the personal agenda of lawyer leaders and the business agenda of the legal function are sometimes at odds. But they are wholly inter-dependent. So both sides have to change. I have developed a three-step model to help achieve this:

Step 1: Lawyer leaders should draft a personal purpose, strategy, and behaviour plan, what I call a personal PSB Plan, for themselves and each member of their team

Becoming an excellent lawyer leader in the broadest sense would, I propose, be a fitting purpose statement for a General Counsel. The best strategy to achieve this purpose, I suggest, is to value emotional intelligence as much as intellectual rigor. Finally a behaviour plan which includes an acknowledgement that they need to value the full range of business leadership skills is more likely, than not, to ensure the successful implementation of their personal strategy to achieve their personal purpose.

Step 2: That the business, not the Legal function, be asked to draft and lead the agreement on a purpose, strategy and behaviour plan i.e. a PSB Plan for the function

I say this because I believe that Legal is often the victim of a fudge created by the business which on the one hand pays for the function, but on the other hand does not always take full responsibility, as its boss, for its obligations to create an environment in which Legal can thrive. So, the Purpose of Legal is, I suggest, to deliver foresight on key risks as well as excellent legal counsel and process, within an agreed budget. The strategy to achieve this purpose is to encourage and support the running of Legal as a business unit and, in the service of that strategy, to encourage behaviors to develop great in-house lawyers and, separately, great lawyer-leaders. This twin track career structure is not currently in place in most organisations. But I see no reason why this could not be championed by the business.

Step 3: Change “the conversation” between the business and legal to ensure that there is agreement and alignment on their respective – purpose, strategy and behaviours

This change in conversation requires high levels of emotional intelligence from both Legal and the business. In particular I refer to three attributes: empathy, the productive negotiation of needs and high levels of self-awareness. These three are core to high emotional intelligence, an essential attribute for leaders and lawyer leaders who want to create an environment in which the Legal function can do its best work. In my experience, when lawyer leaders prioritise the development of their emotional intelligence by working on their personal purpose, strategy and behaviour the benefit has been a palpable improvement in morale, energy and professional fulfillment. Thank you.

Ciaràn Fenton

Helping leaders change

Leadership & Change Consultant

For more than a decade, Ciarán Fenton has helped CEOs and professionals – particularly lawyers – improve their leadership performance, working relationships and to accelerate business and behavioural change. During his early career he held senior business leadership roles at Hachette, ITN, Pearson, and The Guardian Media Group. He has worked with scores of individuals and organisations including, for example BT, HSBC, Capita, Radiant Law, and Unilever, using his tried and tested model – The Fenton Model™ – an innovative approach to self-management that provides senior leaders with the thinking and tools to achieve a step change in their own behaviour and that of each member of their senior leadership team. Ciarán is a mentor at London Business School, a Senior Adviser with the Blueprint for Better Business charity and a regular speaker and writer on leadership issues. He holds a business degree, B.Com (Hons.) from The National University of Ireland, Cork and he lives in Brighton. He is married to writer Marian Garvey and they have two teenage children.

Ciaran Fenton Limited

145 – 157 St John’s Street, London, EC1V 4PW

Mobile: + 447966168874

Email:   cfenton@ciaranfenton.com

Telephone & fax: +44 (0) 207 754 0335   f +44 (0) 871 4336145

Website: http://www.ciaranfenton.com  Blog:  https://ciaranfenton.wordpress.com/

20150602-155351.jpg

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s