Earlier this month I was invited as a guest speaker on the “all hands call” of the global legal team of a TMT client to give a ten minute talk on market changes, collaboration and innovation:
Everyone is talking about the big bang in the provision of legal services after 800 years of stasis. I must be hard of hearing because I haven’t heard the bang. I have recently returned from Ireland where there was a celebration of the Easter Rising in 1916. This was a revolution after 800 years. People from all political persuasions would agree that that was a big bang. I flew to Ireland on a low cost carrier, at a fraction of the cost I would have done as recently as 20 years ago. The rapid changes in the airline industry enabled that cheap flight and one that I booked myself – a process previously unthinkable. These changes happened very quickly indeed and certainly constituted a big bang. I used a credit card to pay for the flight. This card was issued by a bank from a sector in which in the provision of financial services changed beyond recognition in a similar period. That too was a big bang.
So to talk of the changes in the provision of legal services as a big bang is a misnomer in my view. By comparison it feels more like a series of polite conversations. This perception is not helped by the repetition of the same issues at in-house conferences and in industry reports. The list of issues includes: data analytics, artificial intelligence; the use of intranets, social media, project management; globalization; revenue generation and the impact of ABS models. There’s nothing wrong with this list per se, but it’s comparatively safe, predictable, and reassuring – some would say, the comfort zone of many lawyers.
But just because your sector is changing slowly doesn’t mean it’s not changing at all. Nor does it mean that you can afford to be complacent in terms of managing your own and your collective response. I would encourage you therefore to look beneath the standard conference topics.
The deeper issues include 1) how can in-house counsel collaborate better together when they are sometimes at loggerheads with each other and with the business 2) how can they innovate given the downwards pressure on budgets and 3) how can – and I don’t like this phrase but I use it because it has currency – they “do more with less?”.
I attempted to answer these questions in a talk I gave in 2015 at the ACC Europe Conference in Munich and afterwards in a pamphlet I wrote entitled The GC-CEO Relationship post Global Financial Crash: Flourish or Flounder which is available on Amazon and at Success Store. From this I would draw the attention of in-house counsel to three issues that I believe they should not ignore, despite the glacial pace of change.
First, you will not collaborate better together unless you are clear on your shared purpose. By this I mean that you must all be clear on the purpose of the Legal function within your organisation and within your budget. Many GCs push back when I raise this point. They say that their purpose is crystal clear ; that “purpose” is not their problem. They say lack of budget is the problem. But I believe that whilst their purpose may appear to be clear on paper, it is anything but when it comes to implementing the agreed budget. Suddenly their purpose seems to be without limits. It can feel like providing a bottomless pit of legal resources. It’s an environment in which the “diving catch” is the norm, rather than the exception.
So I say, if you want to create an environment in which you all feel more motivated to collaborate with each other better, then you all need a much better shared understanding of the purpose of the Legal function in your particular context and, especially, within your budget.
Of course, this is easier said that done. It depends largely on the quality of the relationship between the CEO and the GC. But individual in-house counsel can contribute to this shared understanding by having the courage to step up and articulate their own views.
Of course there are risks involved in this, I agree. And lawyers are risk averse. But this leads to the second issue that they should not ignore and which links with innovation and that is need to confront, head on, the “more for less” paradox.
How can you do more for less? It implies that previously you were not trying hard enough. This is a demotivating concept. So Legal must demonstrate, rather than assert, its value to “the business” by using its own internal marketing and PR processes. This will put Legal in a much stronger position to negotiate a realistic deal.
For example Legal could tell, rather than ask, “the business” that it needs in its professional opinion, say, 10 things costing 10 pounds/euros or dollars. It should do so in a way that makes “the business” understand fully the value of that proposition.
Then, if “the business” says it has only seven dollars, Legal is in a position to negotiate, and indeed advise on, which three things “the business” must drop. In my pamphlet I call this Schedule X. This is the list of services that Legal declares upfront that it cannot and will not be providing within the allocated budget along with a narrative as to why not. Many in-house counsel tell me that this is a politically naïve aspiration. I disagree. To my mind it would be evidence of a Function confident about is purpose, strategy and behaviour. As the psychologists say, it would be evidence of an adult-adult relationship with the business.
In my view, so long as Legal continues to deliver “free” services, nothing will change and there can’t be healthy collaboration and innovation.
There are risk implications in these issues too. The generic purpose of all in-house counsel is to help “the business” foresee and to avoid risk events and to help grow “the business” by delivering excellent legal counsel and legal process.
But, for example, the VW emissions, the financial services and Enron scandals were all risks that the organisations involved would, no doubt, have wished to have foreseen. Did the risk that someone might install defeat software in cars, might rig LIBOR or fail to carry out an appropriate audit appear on the relevant organisations’ top and emerging risks reports? Apparently not. The culture of those organisations, allegedly, didn’t allow it. Lesser but nevertheless significant risks suffer the same fate in cultures that fail to “call them out”. General Counsel are not responsible for creating a culture of any type but they are in a privileged position to contribute to it and have a duty to do so as risk managers because culture is a risk issue. They can’t do this if they are on the back foot in terms of resources and clarity of purpose.
The habit that lawyers sometimes have of saying “Yes” when they should say “No” to work that they can’t or shouldn’t be doing is a hidden financial cost. The attendant human cost in terms of stress and fatigue is, some commentators say, an organisational time bomb. How much time, money and stress would be avoided if there was a realistic shared understanding and agreement on the issues between in-house counsel and the business. How many top and emerging risks could be avoided if the task of foreseeing them were shared, rather than making it the sole responsibility of Legal?
I am currently writing a business book entitled Small change – how small changes in purpose, strategy and behaviour can transform individuals, leaders and organisations. The book is about how changing just ten actions out of every hundred can make a big difference. That’s just 10% change
Finally, in a context of a shared understanding on the execution of purpose and of agreeing to share the task of providing foresight, the resulting deeper engagement by Legal with “the business” would, I believe, create an environment in which lawyers would be more highly motivated to collaborate, innovate and add value to the business.