Call now+61 3 9908 3784

Legal is no longer a Black Box

3 October 2019

In the early 2000’s, at most organisations, IT functions were a “Black Box of Dark Arts” into which money poured and precious technology came out, often slowly and missing the mark on value. Everyone knew technology could change the game, but few outside of IT understood how it all worked. As such, IT got the budgets they needed to deliver their service with few questions. Today, IT Departments are no longer Black Boxes. They are well understood, measured functions who can deliver competitive advantage for their organisations and largely deliver great value for the budgets they receive.

Today, Legal functions are similarly Black Boxes of Dark Arts into which budget goes and little value comes out, all in the name of managing risk. In fact, in a recent survey by Gartner of over 14,000 managers, 75% of respondents said they did not get sufficient value to justify the time and resources spent on the Legal function.

It’s time for this to change and with General Counsel turnover up 65% over the last 3 years, CEOs are clearly demanding change.

While traditional Legal functions are lamenting having to “Do More with Less”, progressive General Counsels are “Doing More with More” – they not only deliver surplus value for their organisations, they deliver competitive advantage and are being given increasing resources to do more.

The challenge is that most Legal functions look like this.

Risk-Value table

They’re stuck doing low risk, low value legal work and are mostly reactive to the business. Their solution to the problem is more lawyers to do more work.

The reason many legal functions look like this is they employ a model akin to a law firm – personally answer every inquiry to as high a degree of quality as possible to fully mitigate any risk. Progressive GC’s re-engineer and reallocate capacity to spend more time on the things that matter.

Failed Model and Progressive Model of Lawyer-Client relationships

The playbook for scaling the Legal function is similar to the one IT (and HR and Finance) used to transform their function(s):

  • Provide self-service tools to the business to reduce legal demand and increase transaction speed
  • Implement productivity tools for the team to decrease turn-around time
  • Get a system of record to store contracts, matters, supporting documents and approvals to better manage risk and enable analysis of the above.

This results in a series of shifts:
1. The low risk low value legal work is largely done by the business using self-service Apps, which increases the speed of most every transaction:

  • hire people faster,
  • sign on suppliers faster on better terms,
  • open stores faster,
  • bring on new customers faster on better terms,
  • improve the customer experience by providing an easy to use, digital experience.

2. The free capacity from the above allows the legal team to focus on higher value, more strategic work for which they are both well suited and more engaged:

  • studying the regulatory environment to identify opportunities and risks for the business,
  • reviewing business strategy to identify threats and risks,
  • reviewing contracts to identify positions that typically slow transactions
  • conducting pre-due diligence on deals to accelerate acquisitions, investments and joint ventures

3. Most legal teams are then able to bring more work back in-house, resulting in outside counsel cost-savings.

4. By automating agreements, workflows and delegations, risk management and governance is vastly improved – more contracts on your paper on more preferential terms, audit trail of all approvals and advice.

5. Legal becomes a measurable function – turn-around times, contracts/matters per lawyer, client satisfaction, etc.

The progressive Legal function looks like this.

Risk-Value Table

This shift is the ultimate win-win (-win):

  • It is a win for the lawyers who get to do more meaningful work,
  • It is a win for clients who are able to get their needs met faster,
  • It is a win for the business who gets faster transactions, on better terms, for less cost.

So the question is this – will General Counsels drive this change or wait for the change to happen to them?