Achieving a New Balance

Some say that the essence of a good business plan is deciding what not to do. The same goes for managing a legal department. Goals and objectives for legal departments are more in evidence than they were 10 years ago. The departments are larger, more often multi-jurisdictional and even international. Perhaps the company is not headquartered in Canada, but country counsel are in place, as are sophisticated systems for managing resources and performance.

Legal departments are now viewed as an integral part of business operations. In some cases, they are strategic contributors and will be involved in corporate governance and regulatory affairs. This is equally true for public-sector departments. The days are long gone when the legal department was considered part of the overhead and regarded as “business prevention police.” But how can a law department add value? The question must be answered, and the choices must be made and acted upon.

Part of the answer depends on the ability of the legal department to have enough information about the specific projects, the regulatory environment, the type, size and frequency of commercial transactions, and the configuration of litigation that needs to be managed. In short, a good legal department has to be able to forecast the demand and timing for its resources at least a year out.

In order for this to happen, communication and alignment with business units and executive management are essential. It is not uncommon to see at least 70 per cent of the capacity of corporate counsel committed a year out to very specific business and corporate initiatives. Instead of being merely aligned with management, or acting as some kind of gifted SWAT team, effective corporate counsel have become actively involved.

A corporate legal department is not a captive law firm. There are relatively few “juniors,” almost no paralegals, and specialization leans heavily toward corporate, commercial and regulatory work. Moreover, the lawyer does 90 per cent of the work matters with little participation from another lawyer in the department. If anything, external counsel provides the extra manpower.

Corporate counsel can sometimes be more aligned with their internal “clients” than they are with the other lawyers in the department. This lack of teamwork and leverage with other lawyers or paralegals in the law department is not especially cost-effective. It can mean that a fairly high proportion – more than half – of the lawyer's week is given to tasks that call for much less experience. After a while, it migrates from being tedious to being irritating for the lawyer.

General counsel surveys continue to find that keeping members of the department challenged and engaged is one of the top three challenges, but there are several solutions. First, it's important to allow the business units to become self-sufficient for the routine work and to manage the interruptions with fewer hand-holding questions. Hire a lawyer with three to five years of experience to work with senior members of the department. If there is not enough to keep one busy, then co-counsel with a law firm and directly manage the workflow to the law firm associate.

It is also important to measure the value provided. Legal departments, and most professionals, are poor promoters of their collective contribution. Individual members in a 10-lawyer department may know very little about the significance of the work done by most of their colleagues. General counsel would do well to gather up everyone's key achievements, link them to corporate and business plans and then tell the story to the entire department, to executive management, and to the business leads every quarter.

Telling the same story, while using key performance indicators, provides more structure and
frames the contribution in context. It explains how the contribution matters. Standard categories include: governance, regulatory and risk management; special commercial and corporate projects; operational support; cost reductions and revenue generation; and professional achievements.

General counsel must look at all the important variables, make the choices and act on them to achieve balance in managing the company's investment in legal resources.

Richard G. Stock, MA, FCIS, CMC, is a partner with Catalyst Consulting, Recognized Provider for the Canadian Corporate Counsel Association and Preferred Provider for the Australian Corporate Lawyers Association. He can be reached at (416) 367-4447 or rstock@catalystlegal.com.