As hard as it may be for some to believe, in-house counsel are not perfect! The legal media and blogosphere are filled with criticism of law firms and the legal profession by in-house counsel (and others) for their lack of business acumen, high costs, continued use of the billable hour, unsustainable business models, poor communication skills, and so on. You see less criticism of the in-house community and when you do it frequently addresses the failure to exercise fully their influence when dealing with law firms.
So I read with interest a post from Tim Corcoran’s Business of Law Blog entitled, “Not so fast, in-house counsel, you’ve also got some work to do!” Tim frequently provides useful insights and practical advice and this post was no exception. He noted during his corporate experience, the business team normally called the law department only after they made the key strategic decisions to help execute the strategy. He and his colleagues viewed the lawyers as the “Department of No” because they tried to stop any business growth.
Corcoran contends the in-house community needs to perform better and he offered several suggestions for improvement along with specific examples from his personal experience. I highlight a few of his suggestions and offer my comments to go with them:
Understand the business
This should be the bedrock principle for every in-house lawyer. The only surprise here is the fact in-house lawyers come up short in this regard since virtually every article or speech about in-house practice cites this principle in one form or another (“Know the business.” “Its all about the business, stupid!” “Learn the business!”).
One observer noted that business understanding has several levels. These include understanding the commercial basics of the business, namely, how it makes money, as well as the nuances of the organization’s business environment, which encompasses competitors, customers, and the supply chain. Also important: a solid grasp of operational details and understanding the strategic goals of the organization to enable alignment of legal and business objectives.
Allow access to the business people
In-house counsel frequently act as gatekeepers and serve as the primary contact for outside counsel so I found this suggestion especially interesting. Corcoran offers a more nuanced perspective citing the importance of outside counsel getting to know the business people in certain matters to fully understand what is at stake and the underlying business goals and desired outcome.
In-house counsel need to distinguish between serving as the appropriate gatekeeper for outside counsel versus limiting contact with business people as a misguided attempt to protect their own job security.
Embrace continuous improvement
Continuous improvement is the mantra for many general counsel — but the question remains, have you really improved?
Never forget, the law department is a cost centre in most companies and those that fail to improve will, at a minimum, see their influence reduced and their very survival come into question. Corcoran cites the Cisco law department and its use of process mapping and technology to reduce cycle time and eliminate unnecessary steps in the workflow. He also emphasizes the importance of treating the law department as a business function employing process improvement like the other parts of the business.
Make decisions based on data
Corcoran, like many others, makes a simple point: Most law departments have substantial information and corporate analysts available to them who could provide feedback that lets them make better decisions on legal budgets, risk management, and so forth. The challenge is to do it.
Hire outside counsel based on expertise and value
Many departments have made significant strides in this area but others simply demand discounts, which should not be viewed as increased value.
When a GC suggests a law firm should partner with the company, the company must also be willing to partner with the law firm. Corcoran rightly sees it as unreasonable when a GC asks for a budget without sharing detailed information about the matter; or to complain about scope creep after failing to define the scope early on.
I believe three key metrics can be used to define value: reduced legal spend, improved budget predictability, and better legal outcomes. For examples of some organizations you might emulate check out these Value Champions.
Corcoran acknowledges the important role an excellent in-house lawyer can play but those seeking to reach this status and become a trusted adviser must step up their own performance. A good start would be to take Corcoran’s advice to heart.