The Lean Legal Function

How progressive General Counsel are leveraging Lean Six Sigma principles to support the business and improve governance

Most business leaders have a sense of what Lean, Lean Thinking or Lean Methodology is. Definitions typically include the purpose of Lean as, ​“a way of organising people and resources to deliver greater value or output while eliminating waste or aiming for continual improvement”. In this article I will share a brief history of the concept of ​“lean” and show how general counsels can apply these principles to simultaneously scale legal support to the business and improve governance. The application of these principles to the legal function has led to the evolution of the Lean Legal Function which enables lawyers to spend more time doing strategic legal work.

The concept of Lean has its roots in manufacturing and is credited to have first been implemented by Sakichi Toyoda, his sons: Kiichiro Toyoda and Eiji Toyoda, as well as Taiichi Ohno, a manufacturing engineer. In 1929 Kiichiro Toyoda arrived in the USA with the aim of scrutinizing the local companies in the automotive industry. This visit brought about the implementation of a number of new business processes aimed at elevating the production capacity and reduce waste systematically.

It wasn’t until 1991 that the book, The Machine That Changed the World (out of The Massachusetts Institute of Technology), credited the Toyota Production System (TPS) as being the birthplace of Lean Manufacturing. Lean manufacturing has further evolved into Lean Management and the hugely popular Six Sigma. While the purpose of all these concepts is the same, they all vary slightly in their language to adapt to their environment. Lean Six Sigma has at its core:

• Focus on the customer.
• Identify and understand how the work gets done (the value stream).
• Manage, improve and smooth the process flow.
• Remove Non-Value-Added steps and waste.
• Manage by fact and reduce variation.
• Involve and equip the people in the process.
• Undertake improvement activity in a systematic way.

These principles of Lean are not taught in traditional Law Schools and yet the pandemic brought into sharp focus the return on investment companies see from their legal function and the lawyers within them. In-house legal functions can no longer operate like traditional law firms and need to adapt to the language and process efficiencies used by other business functions. The post pandemic era has ushered in the era of the Lean Legal Function.

GC’s and lawyers do not need to be concerned about this evolution, in fact, they should embrace it. At it’s core it will have lawyers doing more strategic work which aligns to the needs of their internal stakeholders and doing less low value tasks which are not connected to the growth levers of a business. Lawyers will focus on the value-added task of helping others (and really, isn’t that why we went to Law School?)

There are 3 primary reasons why a GC and their team should adopt the mindset of a Lean Legal Function. Firstly, GC’s will find that there are ways to reduce workloads in low value areas and redeploy that capacity to higher value tasks. Secondly, a GC can use the process of Lean to drive measurable continuous improvement over time. And, thirdly, GC’s can use Lean language to justify current resourcing and seek additional resourcing to deliver greater ROI to key stakeholders.

By using the principles above, there are some quick and easy tasks you can perform to start to understand how the Lean Legal Function will deliver greater value or output while eliminating waste or aiming for continual improvement:

• Focus on the customer – for each task in the function, do our customers want a quick approval or refusal from legal (marketing compliance) or are they looking for what value add legal can have (the impact of regulatory change in marketing compliance). Are we even talking to our customers about what they want or are we just doing their work?
• Identify and understand how the work gets done (the value stream) – What are all the tasks associated with a process? The business emails legal, legal writes back, a meeting is scheduled, a meeting is conducted to align on instructions, legal reviews relevant material, etc.
• Manage, improve and smooth the process flow – Is the initial email required? Could an instruction form be completed? Could technology determine whether the enquiry even needs to come to the legal function or not? Can technology allocate a task to the right lawyer to reduce double handling?
• Remove Non-Value-Added steps and waste — Could technology determine whether the enquiry even needs to come to the legal function or not? Do we need to have a face-to-face meeting for marketing compliance for a small marketing asset? What would that process look like?
• Manage by fact and reduce variation – Can we standardise our responses to clients for similar requests? In which instances can we not provide a standardised answer? How can we categorise tasks to move towards standardisation? Are all procurement goods agreements the same?
• Involve and equip the people in the process – If we provided the marketing team with a technology solution, they could own marketing compliance to ensure the process is applied correctly. This would enable the legal function to manage the system and exceptions, rather than every request from the business (improved efficiency and better governance).
• Undertake improvement activity in a systematic way – Conduct strategic reviews with your customers on a regular basis. Spend more time educating the business on potential improvements rather than seemingly random tasks allocated to the legal function.

A lot of GCs will read this and instinctively think they are doing parts of the Lean Six Sigma principles, but the benefits of adopting the principles of Lean are very rarely seen unless each principle is followed and strictly applied. A strategic conversation with the Chief Marketing Officer has no value if non-value-added steps aren’t eliminated or we don’t understand precisely what the marketing function needs.

Due to the economic pressures and constraints of the last 18 months, a number of progressive GC’s are adopting the concept of the Lean Legal Function which is simultaneously changing how their businesses view the legal function. These Lean Legal Functions hold the line on risk mitigation whilst simultaneously delivering value add (and therefore revenue) to each of their internal stakeholders. Ironically, it is through business principles like Lean that legal functions will end up doing less business process and having more time to serve their stakeholders with strategic legal advice.