The Value Challenge
Author: Richard Stock - Lexpert, May (Vol 10, No 7) 2009 Issue
Turning a new leaf, New Year's resolutions, and even lightning bolts are not always enough to prompt the members of many corporate law departments to do what is most important, as opposed to most urgent. The problem is not particular to legal services. Companies and management consultants have spent a good deal of time trying to prevent, disguise and remedy the gap between strategy and execution
What were once thought of as specialized function groups - legal, human resources, finance and IT - can today be found "at the coalface". Lawyers enable their companies to develop and sustain a competitive edge in the market or to resolve important disputes. In other words, if they are any good they are inevitably "strategic". It has become possible across a whole range of industries for the legal team to have a strategic business plan, or at least to be a prominent part of the organization's strategic business plan.
This said, why do companies and their law departments fail to do what they say they are going to do? David Norton and Randall Russell of the Balanced Scorecard Collaborative have identified five factors which inhibit execution of strategy. And these can be applied to corporate law departments as well as to the company as a whole. It is true that explaining a problem does not excuse it. But an awareness by legal leadership of the pitfalls surrounding implementation and positioning does improve the odds of success. Our consulting experience over the last fifteen years of working with law departments and the business units they serve allows us to interpret the applicability of these factors to the corporate law department.
Executive Leadership Not Mobilized
On occasion, the legal leadership team is not sufficiently engaged to drive execution. A General Counsel takes on the position, commissions a review of the department, and develops a " strategy ". Buy-in from other members of the department is generally not automatic. But even when it is secured, some members of the department are unable or unwilling to persuade their own team members and the company's business units of the need for change. The General Counsel cannot launch the department's new positioning strategy alone. A new " strategic " way of managing is not understood or is not accepted across the board. Legal leadership must share its vision and be able to inspire the entire legal team to follow in a timely fashion. This is where teamwork begins, because implementation doesn't take place without it.
Strategy not Translated into Operational Terms
Many companies and their law departments are able to set financial objectives. Metrics such as total legal spend or cases / matters resolved are fairly straightforward. But targets to achieve non-economic goals are much rarer. If effectiveness is now one of the most strategic goals a law department can achieve, then developmental objectives to integrate lawyers with their business units, risk management focusing the organization on the trade-offs between legal and business imperatives, and development of the intellectual capital move to the head of the line. To this, one must add the need to measure service with quantifiable indicators. Again, it is the specifics and operational terms that help answer the all important question "What difference did the lawyers make?"
Medium to larger law departments struggle with how best to align and deploy legal services. Either the lawyers work alone and not in teams with other members of the department, or they are so closely aligned with a business unit or a geographical region that little flexibility exists to re-deploy experienced resources elsewhere in the organization. In other settings, the department is populated with talented generalists who try to be all things to all people. As they approach 15 years of experience as lawyers, it becomes increasingly difficult to specialize or to keep up with changing corporate direction.
Few View Strategy As Their Job
Compensation for many lawyers in the company is too seldom designed to reward strategic success. It is normal for compensation to depend on how the company is doing and the balance on individual economic performance. It is the exception to find a significant part of the variable compensation tied to the achievement of the department's Key Performance Indicators and their related targets. Programs to help lawyers acquire competencies of strategic value to the company are often unstructured. Yet leadership and project management skills are a scarce in many companies. Legal competencies alone are simply not enough to succeed as experienced lawyers.
Insufficient Communication and Direction
When department meetings are held, a review of progress on strategic objectives is rarely at the top of the list. Budget cycles and variances are discussed. But discussion about planning and strategy is at best sporadic.
Matters that are urgent deserve the attention of corporate counsel. But they must also be important in relation to the strategic objectives the company and the department have set. Otherwise, the department is again failing to do what it said it was going to do.
Adapted for law departments from "Strategic Lapse" Lexpert. Vol 6, Issue 3. January 2005