How to Set up an In-House Legal Department

In-house Legal is quickly becoming one of the most important departments in the modern business world. From start-ups to multinationals, having a strong in-house Legal team can help a business thrive in a competitive world and manage an ever-evolving risk landscape.

Compared to external counsel, in-house Legal teams are able to build a deeper understanding into the nuances of the business and the relationships it has. Traditionally an in-house Legal department's role has been to provide legal advice. However, the in-house legal role has now developed to be more aligned with supporting the business to achieve its wider objectives.

In-house legal counsel is the fastest growing segment in the legal profession, demonstrating that businesses are increasingly recognising the value of having lawyers who know the business intimately on the team.

What is an in-house Legal department?

An in-house Legal department is the team of lawyers, also called in-house counsel, who work within a company to provide legal support. Unlike in private practice, in-house counsel works for only one client - the company - at a time, allowing them to have better focus on key issues. In-house counsel are not measured by the amount of billable hours they work for client matters. Instead, their targets are in-line with overall business objectives and KPIs.

What do in-house legal counsel do?

An in-house legal counsel's role is to provide legal advice to ensure compliance with laws and regulations, and mitigate any risk the business may be open to. The specifics of the job can vary widely depending on the employer, the industry they operate, in and issues they are facing.

An in-house lawyer knows their business's client's risk profile much better than an external lawyer will, allowing them to invest time on different tasks based on their relative risk. Part of their role might also include project management, ensuring external legal support and spend is being leveraged effectively.

The role of in-house counsel has been expanding in recent years to have a stronger business-focused lens, be more aligned with value creation, and support the business to apply risk in a way that's competitive.

When do I need an in-house Legal department?

Most businesses start involving lawyers with their business activities by hiring external counsel rather than making the investment into hiring in-house counsel. Though it’s easier to get started with external counsel, this approach means businesses miss out on all the benefits an in-house lawyer will bring. In-house lawyers don’t only provide legal advice, but also act as business partners and advisors.

As the amount of legal work increases it becomes more important to have resources in-house who understand the business with the depth that only an employee can. Most companies hire an in-house counsel when the amount of legal work has reached a point that it would be more cost-effective to hire an internal lawyer rather than continuing to pay the high costs of external counsel.

It’s important not to wait too long before setting the foundations of your in-house Legal department and hiring your first in-house lawyer, as legal issues can impact efficiency and become a burden on the business. There may also be a number of risk factors going unaddressed which could potentially lead to serious or costly consequences for the business.

How to set up a successful in-house Legal department

Once your business is ready to invest in an in-house legal department, it is best to work with your HR or recruitment team to agree on the key outcomes you are intending to achieve with the role. They will need some guidance on the specialty and experience levels which would be most useful to the business to start with.

You may decide you need a generalist, or someone with specific in depth knowledge about an area important to the company, such as employment law. You may examine your company's growth, and determine where you expect legal costs to grow, and base hiring off this.

Once you have hired your first in-house counsel, you can work with them to begin building out the rest of the Legal department, as the legal needs of the company grow.

In addition to permanent headcount, many General Counsel adopt an agile talent model for their in-house Legal department.

Utilising agile legal talent allows General Counsel to:

  • Address variable workloads and shifting business priorities

  • Ease the burden placed on the core team so that leaders can deploy their team’s expertise in the right areas and allow them to focus on key strategic priorities

  • Better manage legal department costs

  • Build a resilient Legal function that is prepared for the future.

Legal secondment companies like Plexus Engage provide specialist flexible legal talent to temporarily join in-house legal teams, support their changing needs and tackle a range of in-house Legal matters.

How to measure success in a Legal department?

One of the biggest challenges General Counsel face is how to measure and demonstrate the value of their Legal department. Given much of the value of legal is subjective (e.g. it's hard to quantify ‘risks mitigated’), it can be difficult to effectively communicate success or improvement back to the business.

To solve this confusion, leading Legal departments align their targets and goals to the wider business objectives, rather than by individual performance measurement metrics they might have used in their law firm days.

One way Legal departments track legal value is by focussing on legals core, and calculating legal value as:

Some Legal departments choose to utilise legal technology to help measure success, such as contract management or workflow automation which can provide insights on how legal work is flowing through the business. To learn more on measuring success in a Legal department read our article Measuring Legal: KPIs for In-house legal teams.

Roles and structure in an in-house Legal department

The roles and structure of an in-house legal department can vary from business to business, depending on its needs and situation. Some of the common roles are General Counsel, in-house counsel, sole regional counsel and paralegal.

Generally speaking, the head of an in-house Legal department is the General Counsel. A General Counsel’s role is to provide legal advice as well as overseeing the Legal department, company wide legal issues, advising to the executive team and strategic work.

Below and reporting to a General Counsel is in-house counsel, who can be split into Senior or Junior Counsel depending on their level of experience and rank. An in-house counsel’s role is to give the organisation high quality advice on a wide range of legal matters, as well as to support the organisation to gain competitive advantage through application and understanding of risk. Some in-house counsels will be specialists in a particular area depending on the company's needs, for example a company may have an in-house counsel who specialises in IP.

Other roles that an in-house legal department may have are a sole in house counsel, or sole regional counsel. A sole in-house counsel is similar to an in-house counsel, except that they are the only lawyer working within the business. A sole regional counsel is a lawyer who, although may be part of an organisation's wider legal team, works as the only lawyer for a specific location, office, or division.

Additionally, some in-house Legal teams have roles that don’t necessarily require one to be a lawyer, such as paralegals, legal secretaries and compliance officers. A paralegal’s role has traditionally been in administration and support, although some take on more complex tasks. A legal secretary's role is usually in providing secretarial and administrative support to lawyers. And a compliance officer’s role is to mitigate risks through creation and implementation of company policies and procedures to ensure the organisation is compliant with the rules and laws of the relevant regulatory bodies.

There is a growing trend in Legal departments of employing more non-lawyer staff, such as data analysts, app developers and legal knowledge engineers.

These roles work together to support the company in all legal matters and make up the in-house legal team.

What is an in-house Legal department vision statement?

An in-house Legal department vision statement is a document that establishes the purpose of the Legal department and the guiding principles it will follow to achieve that purpose. It forms a foundation for planning, helping to develop the Legal department’s strategy, objectives and goals. It acts as a framework for the team's purpose, articulating it in a way to move the team forward in a specific direction.

Legal teams should ensure the vision statement aligns with, and reflects the businesses wider strategy, prioritising supporting the organisation's strategic objectives. When creating the vision statement Legal departments should consider the benefits they can offer the business through the department's skills and competencies.

It should also be clear, as if it is too vague it can create warped expectations and priorities, leading to a lack of direction. The vision statement outlines what the Legal team will deliver and the role it will play, guiding the team to operate purposefully and strategically.

It is a statement to the Legal team itself and the rest of the business, so it should be shared with the rest of the business, as well as being regularly reviewed and updated to ensure it remains relevant.

Why work as an in-house legal counsel?

There are many reasons one may choose to work as an in-house counsel, and as the in-house sector is growing rapidly it’s clear many lawyers are opting to make the switch.

For example, in-house lawyers have a diverse range of work rather than having to specialise early on in their career. They are exposed to a range of different matters, practise areas and tasks every day. This often means in-house counsels receive cross training in several areas of law, as well as enjoying variety in their day to day work life.

In-house lawyers are often considered 'more commercial' than their law firm counterparts, due to their first-hand exposure into how businesses actually run. In-house lawyers balance being both business people and legal advisors.

An in-house lawyer works only for one client, the business, they can have a keen focus on their client, unlike a lawyer at a Law Firm who must balance multiple diverse clients. This focus allows in-house lawyers the opportunity to truly align with and understand their client. Although technically the client is the business, in-house lawyers often think of the individuals within the business as their “clients”. The common context their “clients” share, as well as an in-house counsel's insider point of view, makes it easier for in-house counsel to deliver more value.

Working in-house allows counsel to feel as though they are truly making a difference, as the work they do has a direct impact on the place they work. Working in-house facilitates team building, as there is an opportunity to build strong and lasting relationships with people across the entire business.

This is just a small range of the many other benefits to working as an in-house counsel.

How to improve the in-house Legal department?

Create common goals and objectives

It is important in any department to make sure all team members are on the same page, and this holds true for in-house Legal departments. When setting up your Legal department, ensure the team understands its purpose and role in the business and how it will contribute to the organisation's overall business goals and strategy.

Clear goals and objectives help the Legal team to support the business, elevating it from just a problem solver to a real business enabler. Legal teams with a strong set of values and purpose are likely to be more effective and successful than one who is just trying to work through an in-tray. The in-house Legal department goals and objectives should focus on what you want the in-house Legal team to achieve, and can be laid out in the team's vision statement. By giving a Legal team a clear direction they will have clarity on what to work towards, and a better way to measure their success.

Communicate Legal's role in the business

One of the best ways to set a new Legal team up for success is to create and then manage expectations with the wider business. Clearly set out, and communicate the function of the Legal department, its role and responsibilities, how legal work will be dealt with, and where external counsel may be needed. By setting explicit boundaries and expectations from the outset, you will be allowing your in-house Legal team to operate more efficiently and effectively and provide clarity for the rest of the business.

Enhance Legal's understanding of the business

An effective Legal team should have an in-depth understanding of the business and all factors that may affect operation flow. The in-house Legal team’s customer is the whole business. Forming a deep understanding of each department's regulatory environment, structure, operations and its legal support needs is key to enabling Legal to appropriately serve the business. Having a comprehensive understanding of the businesses goals and objectives will further allow the team to target their efforts to provide the best value for the business.

Strengthen relationships with the business

Relationships between the Legal department and the business can vary in depth and quality. Some Legal departments only operate to approve contracts while others take a more active role in supporting the business. Constructive Legal teams will have firm bonds and relationships with the rest of the business. Strong relationships with the business allows the Legal department to become trusted advisors, and show the business that they are there to support broader strategy and drive competitive advantage.

Most Legal departments will deal with employees from across the business, and to run efficiently Legal must have a well-built bond with them. Additionally, these relationships allow the Legal team to keep updated with the general course of the business, maintain their risk intelligence, and gives them access to higher level strategic work.

Foster a culture of continuous improvement

Creating a culture of continuous learning and improvement within the business encourages your in-house Legal team to stay on top of changes in the regulatory environment. By reinforcing the importance of constant personal and team growth and development, they allow Legal to maintain the relevant skills and knowledge to keep up with the needs of the organisation.

To further encourage continuous development, businesses should build processes which support continual growth and development of Legal’s workflows. This may include regularly reflecting on how Legal is able to support the business and identifying opportunities to increase efficiency in support delivery or simplifying compliance processes. A high-performing Legal team uses learning and development as an opportunity to focus on more than just their legal skills. They take a proactive approach to focus on wider aspects of the role, including knowledge of the business and sector, improving business intelligence to identify potential, risks, opportunities and changes in the environment, and skills training on behaviours like communication and leadership.

Incorporate legal technology

One of the most common tactics progressive Legal leaders are using to find efficiencies and better support the business is adopting legal technology. In-house lawyers are in a good position to innovate the Legal industry as their roles are typically broad and they have influence over many decisions. Utilising legal technology like Plexus allows Legal teams to work smarter not harder by automating administrative legal processes, reducing admin, improving compliance, accelerating execution, and frees the team to focus on more strategic tasks. A report from Deloitte found that introducing technology into the legal function can add value to an entire organisation and create additional competitive advantage.

Technology is an enabler of better legal work, and it is forecast that Legal departments will increase their spend on legal tech threefold in the next few years. By giving in-house counsel the right tools and utilising them effectively, they can reap benefits for the whole business. For useful tips on how to secure budget for legal transformation initiatives, download our free eBook.

To wrap

In-house Legal departments are a key element of many successful businesses today, and ensuring you have a strong Legal team is imperative to any business that wants to grow.

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