The Business Unit's View of the Legal Department
Author: Richard Stock - CCCA Magazine, Spring 2012
After recently interviewing some 30 representatives of business units about how they regard their use of legal services, I was able to find a number of opportunities to add value. These are often, but not always, present in corporate and government settings. From the vantage point of the consumer of legal services, things are not always clear. Priorities are not the same as those of the legal department.
Business units are quite unable to quantify the amount of legal work they will need in a year. Most legal departments do not keep time and do not chargeback for their work. So few legal departments are able to estimate and communicate the amount of resources that will be required for complex matters. Instead, they simply do the work and suggest milestones and completion dates. The complexity and volume of work are not top-of-mind for the business unit. Not surprising then that they under-estimate the amount of effort required to complete a matter in the legal department.
However, my interviews did tell me that most consumers of legal services are pretty knowledgeable about what types of circumstances and matters will require support from the legal department. There is not much doubt about litigation, other forms of disputes, and for regulatory matters. The grey areas are those involving commercial transactions – deals, leases, licensing agreements, and so on. Unless the working protocols are explicit, the business unit will call the legal department too late in the process and come with incomplete documentation.
A few organizations actually provide written guidance to business units in the form of protocols for “When to Call Your Lawyer”. Some companies spell out the list of circumstances, suggesting when to call. No doubt that experienced business executives and senior management of most companies need little coaching in this regard. But front-line management and professionals in large, decentralized organizations may not have the experience to get it. Some will call every time, just in case. This helps with risk management, but repetition and interruptions do not make for efficient operation of the legal department.
Better to generate a protocol that makes it clear when consulting legal is mandatory and that sets out when it is advisable to call. It is also important because it helps to manage business unit expectations for service delivery. Every survey of legal departments shows that business units criticize turnaround times. Better then to adjust the expectations for intake. These are occasionally supplemented by service level agreements (SLAs) and standards for accountability and turnaround times. They are easier to apply to high-volume work. Special projects and last-minute complex work lend themselves better to legal project management methodologies where phases, tasks and schedules are developed in collaboration with the business unit.
Business units know if they are organized or chaotic, methodical or improvisational, and progressive or freshmen in how they consume legal services. In other words, they know their strengths and weaknesses. Like law firms, legal departments depend on effective working relationships with their clients. In-house counsel are reluctant to introduce a lot of structure in their relationships with business units – perhaps thinking this will dampen the perception of their effectiveness.
There was a pretty clear consensus during my interviews with business units that guidelines, standards, and templates would be welcome. Otherwise put, they favour all measures which reduce the amount of time it takes to get things done and the resources to achieve it.
Legal departments have no financial incentive to accumulate the hours on a matter. Quite the opposite. So, it is surprising to still find that significant volumes of commercial activity are the object of one-off reviews and service by the legal department and not reduced to standard forms and templates for use by the business units. Setting aside enough time to develop these tools is a challenge in legal departments that run flat out. It requires collaboration with the business unit and procurement. Their level of complexity and applicability will vary. Real estate, commercial loans, licensing agreements and many other areas of activity can be streamlined to have the legal department involved on an exceptions-only basis.
Paralegals and other experienced technical support are hard to find in legal departments. Corporate counsel seldom have “juniors” available to whom they can delegate tasks. All lawyers have their own “clients” and full workloads. So there is little evidence of team-based lawyering. Too much of every day is spent by senior counsel on work which should be delegated to other members of the legal department – if they were available, or on work that should be pushed back into the user community. Together, this can consume up to 30 % of senior counsel’s time.
While freeing up 30 % of counsel’s time will not reduce the workload, it will free the legal department to deploy counsel on more strategic work, to possibly in-source or co-counsel work from external counsel, and to make the job more interesting, even if it is no less frenetic. Combine this with demand forecasting, service level agreements, standardization and templates, and protocols on when and how to call on legal services, and business units will be receiving better value.