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  Effectiveness, Version 3.0

Author: Richard Stock - Lexpert (Vol 11, No 10, October 2010)

My firm conducted a survey recently that was designed to identify some of the most progressive practices (version 3.0) from companies that have the wherewithal to push the boundaries of legal services delivery.

We approached the legal departments of 11 publicly traded US corporations that have proven to be innovators in legal practices — tech giants like Microsoft, Intel, Cisco, and 3M, as well as a few companies, such as Aetna, Tyco and DuPont. We asked them about some of the most significant considerations and challenges for ensuring an effective department.

The responses to our questions – 100 of them across a comprehensive list of 12 categories – demonstrate sophisticated solutions to the kinds of issues that beleaguer many corporate legal departments. Only highlights from the survey are featured here, although even a surface glance reveals important insights.

Efficiency and Effectiveness

Because the effectiveness of each legal department is directly correlated with its contribution to corporate objectives – which vary from company to company – we asked the respondents, first of all, how they set their annual objectives.

While all respondents align their objectives with corporate objectives, the formality of these processes varies. For example, 3M starts with corporate goals, leading to legal goals, leading to strategies, tactics, metrics, strategy drivers and resources. But regardless of how objectives are decided, the takeaway is clear: documentation and tracking of objectives are essential to an effective department.

Another area that requires careful management is legal services delivery. It is certainly not enough to be responsive to issues as they present themselves. Legal teams must be proactive, and a few have introduced measures over the past three years to make business units less reliant on the legal department — all with a view to accelerate the conduct of business.

Microsoft, for instance, reduced business-unit reliance on the legal department with its client-facing intranet site. Services are delivered to end users by allowing them to self-serve on more routine and low-risk work without waiting for legal.

Cisco Systems, meanwhile, introduced electronic acceptance engines for e-signatures, and reduced the need for couriers and hard copy. This was coupled with electronic approval processes, relying on standard form agreements with pre-approved standards to let users complete contracts.

And when another legal department faced a 10-per-cent staff cutback, it took immediate steps to reduce demand proportionally, holding high-level meetings with the executives heading up each business unit. It helped that the legal department brought specific proposals to the meetings. While day-to-day users of the legal department were not positioned to see the big picture and did not have the authority to change demand patterns, their executives did.

Managing Workflows

One might conclude that only the biggest companies have the resources to be effective and efficient. The reality is that leading a department or one of its practice groups, or even working as a lawyer in one of the departments, is as much art as science when it comes to managing workflows.

When asked about the nature and extent of planning regarding the demand for internal and external counsel, most said that they meet annually with business units, but only two indicated that they formally adjust their plans during the year in response to demand. The other companies triage priorities as they arise and “go with the flow.”

Only two departments said they had written protocols in place to guide business units on when and how to call on the legal department. It appears, however, that the legal departments at the remaining companies are well enough integrated with their business units. For instance, client-facing intranet sites are robust and updated frequently with content and process advice. In one case, these include short videos designed to inform clients as to when they should engage with the legal department.

At Microsoft, some practice groups have established service level agreements (SLAs) with their clients to clarify timeline expectations for response and completion. These SLAs have improved the satisfaction level of their clients. Microsoft’s “deal help” tool, meanwhile, was introduced to accelerate deal velocity and provide a searchable repository of questions in relation to commercial transactions. Standard response times are built in for the majority of inquiries, empowering business units to take smart risks in order to compete globally.

There is not a lot of bureaucracy built in to the management of legal departments for companies in this survey. All responded that the lawyers receive their work directly from their clients, rather than from a single point of entry for legal.

Probing further, the survey asked about the techniques used to manage peaks and valleys in the workloads of individual lawyers. Insurance-sector participants deal with the intake and allocation of claims litigation through specialty and litigation management positions. In one case, practice-group leaders meet regularly with their lawyers to ensure they have the support needed to meet their goals.

For the most part, however, lawyers are expected to manage their workloads individually unless unexpected circumstances arise. While this may seem disorganized, most corporate counsel have at least 10 years of professional practice experience and are able to adjust priorities and effort accordingly.

Performance in 2010

Each legal department was asked to single out the most effective means to improve performance in 2010. Because of cutbacks in 2009, one company said retention, morale and work/life balance are the priority. Another relied on a four-part program: bringing a solution-oriented approach to the table when partnering with business units; communicating legal-department metrics; aligning legal structures with business processes; and accelerating the use of electronic solutions in legal services. Yet another said it is looking to improve on five dimensions: innovative strategies, speedy execution, seamless support, nimble collaboration and efficiency everywhere.

These firms have the resources and innovative cultures to implement their strategies around the world. Smaller companies, however, are than capable of following their lead. A more effective legal department is manageable.

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