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  Arrested Development

Author: Richard Stock - Lexpert (May 2007 at p. 107)

Weblink to magazine article: Arrested Development

Sometimes the obstacle to legal-department advancement is the department itself

OVER THE PAST SIX months, I have observed and worked through a number of situations where decision-making about resource allocation and policies in legal departments had stalled. The first department – this one with 30 lawyers and staff – expressed an interest in developing a new organizational structure and new criteria for advancement. The idea was to get more challenging work to good lawyers who felt stranded - increasingly one of the top challenges for general counsel.

Part of the solution for this department came from taking a careful look at the work being referred to external counsel. Aside from complex litigation and specific jurisdictional files, there was enough potential to in-source work and to co-counsel some matters. Altogether, this would generate 2,000 to 5,000 hours of additional volume — much of it better suited for experienced lawyers. The immediate question, though, was how to take on the work, distribute it across the department, and eliminate 7 to 10 per cent of the more routine activities in the department without adding headcount.

Six months after framing the questions and discussing possible solutions, this initiative has drifted down the agenda. The review has yet to be conducted and no changes have been made to work allocation. The reason for the delay? A series of complex legal and business matters that have taken up the lion's share of the general counsel's time for nearly half a year.

The second legal department had four lawyers and three staff, and operated as a not-for-profit. A number of internal clients had not been satisfied with service levels, and the new GC was determined to build a more cohesive team. However, when the legal team was asked to change how they worked and how their performance was measured, two lawyers actively resisted.

Three months later, it appears that the declared “transformational change” requested by the general counsel has “bogged down” on two counts. The first is that more time was given to the lawyers to “come around” and to buy into the changes. The second is that it has taken longer than anticipated to persuade a few of the key internal clients to move away from the handholding that had been tolerated. While the honeymoon period for the general counsel has expired, she has been careful to not spend an excessive amount of political capital too quickly for this initiative.

The third legal department, working in tandem with the organization's strategic sourcing department, decided to tender its legal work for the first time in 15 years. However, requirements for transparency in public-sector procurement processes and a series of irregularities in contracting for goods and services, complicated the preparation of the RFP specifications. Everyone wanted to get everyone else to sign off, thus adding four months to the process.

Two rules-based and process-driven departments such as procurement and legal are rarely aligned in their world views and operating practices. Difficulties began when the legal department could not estimate its three-year requirements for external counsel. There were, moreover, a host of RFP-related issues on which the department could not find agreement: the extent of convergence, from 15 firms to two or three; selection criteria and their weighting; targets for cost savings; or whether to move away from traditional, discounted hourly rates. After six months and a public call for proposals, submissions were eventually received from 17 law firms – some with a history of work with the client and others with little or no legacy. In the interest of keeping peace within the legal department, and possibly because of a tendency toward extreme risk aversion, process trumped results.

There is something to be said for managing a 10-week project in 10 weeks rather than 25 weeks. In this case, several competencies were deficient: a focus on results rather than process, a lack of commitment to innovation with external counsel, a lack of efficiency as demonstrated by the disproportionate time invested by 10 individuals to issue the request for proposal, and a lack of leadership in the procurement and legal departments.

In each of the three departmental examples, a lack of strategic business sense compromised the outcome. At times, communications were poor and performance incentives were missing. But mostly there was a failure of legal leadership teams to invest enough time to get things done. Failure to decide and to execute erode credibility and compromise a department's potential.

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