Building Leverage Strategically
Richard Stock - Lexpert, Vol 11, No 4
Most law departments are well managed. They invariably consist of engaged lawyers who meet budget and satisfy their primary users. These characteristics, by some definitions, would constitute effectiveness - but not for John Frank. Microsoft's Deputy General Counsel argues that an effective law department must go beyond satisfying users; it must shape priorities, influence the deployment of resources, and ensure that the department's contributions are recognized. Before any of this can happen, however, the department requires what can be called "strategic leverage."
This is not to be mistaken for the leverage found in law firms (the ratio of partners to other fee earners). Leverage in a law department has more to do with having a strong strategic voice, by being aligned with organizational priorities and being able to make measurable contributions.
What does this mean in practical terms for the General Counsel? With a 50-hour workweek and a permanent three-day backlog, it might seem impossible to find time to think about these matters, let alone introduce, communicate and sustain a new management approach. There are no easy answers here. The effectiveness of the law department - and of the law firms it calls upon - depends on simply taking the time to move to another configuration of activity.
Even then, building leverage can be an involved process. It means finding the right configuration of three basic components: selectivity in the legal and advisory work itself; shifting the competencies of department members; and expanding the capacity of the department and its law firms to deliver what is needed.
General Counsel must understand and manage each of these components well enough to come up with the right combination for the company every year.
Selecting What Work To Do
In part, strategy is deciding what to do and what not to do, a first step to building leverage for the department. While all law departments use formal planning and budgeting tools to manage their work, this is not enough.
General Counsel should prepare a "legal demand forecast," which estimates the number of matters, the extent of advisory services, the hours for all regular work and special projects by business unit and by legal specialization - work that should account for about 90 per cent of the resources of the department and of the use of external counsel.
Not only will such a forecast produce a clear picture of the need for external counsel, it should support discussions with principal users and within the department. This forecast should then be refined: first, by defining what type and volume of work will no longer be available from the department; second, by redistributing work within the department to address knowledge sharing, cost-effectiveness and workloads; third, by deciding what work to in-source from law firms in order to offer greater challenges for legal professionals and to save on external fees.
Like cooking from any recipe, preparing a forecast is a matter of selecting the right ingredients and then adjusting when needed.
Ensuring that the law department has the right competencies (knowledge, skills and attributes) is, of course, a crucial part of effectiveness. Experienced professionals and legal executives must master a broad spectrum of competencies if they are to help build leverage. For some, it may be time to acquire a new competency, while others may require greater proficiency.
There are six competencies that speak to the ability of professionals and legal executives to assume a position of influence within the organization: (1) "results-oriented," striving to improve bottom-line performance under difficult circumstances; (2) "efficiency," looking for ways to get things done more quickly, with less money and fewer people; (3) "leadership," demonstrating energy, resilience and the courage to take responsible risks with integrity; (4) "impact and influence," excelling in persuasion and negotiation tactics in the face if resistance; (5) "teamwork," working co-operatively to achieve group and organizational goals; and (6) "achievement-oriented," demonstrating a commitment to meeting or achieving a standard of excellence.
The better performance-management programs will encourage competency achievement. General Counsel will set individual objectives for their lawyers each year. Where they often fail, however, is in shaping those objectives to correspond with the demand forecast. By failing to make this connection explicit, the opportunity to align the department's competencies with organizational priorities is lost and the department loses leverage.
General Counsel must create the opportunities and provide the resources for the department to acquire the knowledge and skills that generate leverage in the near term. The progression of legal competencies runs in parallel. The personal attributes and the business competencies are a basic part of the formula for leverage.
Finally, generating additional work capacity is essential to building leverage. Studies of law department workflows show that work typically expands to fill the available capacity. On the other hand, some professionals seem more stressed when there is not quite enough to do than when there is too much. There seems to be no happy medium.
The department can mitigate the effects of this paradox by agreeing once a year with primary users about what their service requirements are likely to be; who their contact in the law department will be; what kind of preparation and documents are needed beforehand; and what are the standards for turnaround. For their part, counsel in the department should replace drop-ins by users with scheduled visits to the users. Two lawyers, a primary and a secondary - not a senior and a junior - should be assigned to each major user group as a way to meet service levels and deadlines.
Department leaders should be comparing the results delivered to business units against plans every 90 days. Priorities should be continually recalibrated and resources should be reallocated in order to deliver the work, develop the competencies and balance the capacity levels of the department. That is how the General Counsel builds leverage strategically and how the law department adds value.