5 Changes Every Legal Function Needs to Make

Legal function transformation

Competition is no longer about the big eating the small. It is about the fast eating the slow. It’s speed that will determine winners or losers. Functions that get in the way, do so at their peril.

Let’s start with an uncomfortable truth. In a study of 14,563 end-clients, by research body CEB, 74% disagreed with the statement ‘Our Legal Function delivers sufficient value to justify the time and resources we spend’.

I know what you are thinking – ‘that’s not us’, ‘our clients value us’

But the reality is whether it’s 74% or 40% you have a problem. A problem that goes to the root of both what Legal functions do, and how they do it.

The Backstory

As the sun sets on the industrial era ‘digital transformation’ has become the dominant buzzword for the executive suite.

The winners, who can develop business models designed for the digital era, win big and do it fast. Bill Gates was the youngest self-made billionaire in history at age 40, Mark Zuckerberg and Evan Spiegel achieved the same in their mid-20s.

For those that don’t adapt the opposite is true. The average amount of time a business remains in the S&P 500 has gone from 65 years in 1960 to less than 10 years today. Those that don’t make the digital shift see rapid destruction of shareholder value.

Businesses not only need to make this shift. They need to make it fast.

But from the businesses perspective, there is a problem. Where strategy meets execution, there is a Legal task (or likely thousands of them).

These tasks are the connective tissue of businesses. They form both a bridge and a barrier to organisations. Legal activities provide certainty in the value creation process.

As our research clearly shows, the business sees the Legal function as the biggest barrier to launching new initiatives. Indeed, in a survey of 10,765 executives, the Legal function was identified as the creating the greatest drag on digital transformational initiatives.

While most businesses have gone digital, legal is still analogue.

The move to a scalable legal function

When in-house Lawyers think about improving the value they often run to Law Firm answers - improving the quality of Legal advice and lowering the cost. However, paradoxically these efforts may ultimately reduce end-client satisfaction.

Indeed, the business often circumvents legal. Research by CEB suggests more than 6 out of 10 significant Legal questions are made without Legal guidance.

What clients want is speed. ‘Responsiveness’ (i.e. turnaround time) is twice as important end-client-satisfaction as quality and 100x the cost.

To achieve this, here are five changes Legal functions need to make:

1) Shift from working in the machine to on the machine

Not surprisingly Lawyers feel comfortable doing Legal work. As a result, they consistently prioritise ‘urgent’ (often low risk) client matters, over ‘important’ Legal functional improvements. The problem is the client matter only provides value once while providing self-service tools scales that value many times. GCs need to ‘ring-fence’ 30% of their time to work on Legal transformation. See our Legal Transformation Playbook.

2) Rethink risk management

If you ask every Lawyer on your team to review a Legal contract, it is likely each will come back with a different view of risk. Worse, their risk tolerances are vastly different from the businesses (this is the primary reason why Lawyers can, unfortunately, be branded as ‘uncommercial’). Functions need to work with adjacent assurance functions to adopt a more holistic view of risk and embracing concepts like ‘risk resilience’ to reduce over processing and shorten cycle times. Read about The Future of Risk Management.

3) Embrace technology to enhance productivity

It’s time to bury your Dictaphone. Leading GCs are ignoring the AI Hype Cycle and focusing their Legal technology budgets on three sets of solutions that are shown to have the highest ROI:

  • Client self-service tools
  • Legal operating systems
  • Contract life-cycle management tools

Read about the 8 traps GCs make when adopting Legal Technology.

4) Stop serving your clients

Perhaps GCs greatest frustration is that their teams consistently get caught in ‘the trough of low-value work’ – while the strategic activities go under supported. The problem is that there is limited clarity or consistency on what work the Legal function does, and what it doesn’t do. In an effort to ‘serve our clients’ the squeaky wheel gets the oil. Read this blog on the subject.

5) Hire for business acumen, not technical excellence

The hiring approach for Legal functions has historically been a replication of the Law Firm playbook. Hire the best technical Lawyer, with the best academic pedigrees. The challenge is these Lawyers focus on the academic application of the law is often at odds with the commerciality, solutions orientation and responsiveness the business demands. Indeed, they often ‘get in the way’. GCs need to start hiring for a new set of competencies. Read about the Legal Capabilities of the Future here.

The Legal Transformation journey may seem intimidating to legal functions who have made limited changes to their operating models in the past, and already feel stretched thin. However, as the age-old quote says ‘to run a marathon you must first take a step’. These five steps are proven to get you there faster and improve the legal function in your business.

The world's top GCs work with Plexus

As the global economy moves faster and becomes increasingly volatile, organisations must radically evolve their operating models to more dynamically identify and respond to opportunities and threats. Plexus helps leading GCs shift their organisational design, evolve their talent competencies and digitise their functions to deliver faster, most cost-effective and more agile legal support.

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