The in-house counsel imperative: Legal counsel to business strategist

The in-house counsel imperative: Legal counsel to business strategist
About five years ago, I had the opportunity to be part of an audience listening to the general counsel of Google, Kent Walker, and the general counsel of Microsoft, Brad Smith, discuss what the future law department would look like. They spoke about the role of technology and how it would shape the work of in-house counsel. Productivity gains would be driven by increasing collaboration and the flow of information. Everyone would have greater access to legal knowledge and information. They also spoke about the “commoditization” of legal services where routine, repetitive legal services could be outsourced. On its face, this would seem to lead to a diminished role for in-house counsel. However, the ranks of corporate counsel continue to grow. The theme of the discussion was also that, no matter what technology brings, in-house counsel will continue to be essential to the organization. This is because in-house lawyers are always needed to synthesize information, to add judgment, insight, and wisdom.

Dictionary.com explains that the “goal of legal counsel should be to minimize the need to reach out to outside legal resources.” While this definition is a simple one, I think most business people hold similar views of what in-house counsel does.

So, is this really all that an in-house counsel does? We know in-house counsel long ago shed the image that they just managed the distribution of files to outside counsel, largely in a reactive, secondary role.

How do we measure what in-house counsel do? I suspect that many organizations today continue to measure the success of the law department by the amount of money they save compared to work going to outside counsel. If this is the main metric to measure success for in-house departments, then most companies are not getting enough out of their in-house counsel and, by extension, their legal department. Targeting costs likely forces in-house counsel to find ways to maintain lean and efficient law departments who focus only on delivering legal services at a low cost; this traditional style law department is typically isolated from the main functions of the organization and the in-house lawyer becomes an individual contributor. Companies can get more value from their in-house lawyers by allowing them to step away, even a bit, from this traditional, reactive style of practice. By doing so, I am sure, will lead to greater value creation for the company.

Most company business units are only concerned about business and commercial objectives. However, where in-house counsel can really help business units is when the in-house lawyer’s contributions can be linked with achieving those business and commercial objectives.

The next step is for in-house lawyers to, as a matter of routine, move to providing proactive business strategy. This will not only increase the value of the in-house lawyer, but will help to shed the image that in-house lawyers can only manage risks by getting in the way of company strategy. Unfortunately, for most lawyers, it is part of their makeup to avoid and mitigate against risks at all costs, rather than finding ways to manage risks to advance business objectives. The key, however, is that more of this work needs to be proactive and collaborative environment, rather than reacting in isolation to legal issues.  

A company lawyer is well-positioned to lead on strategy matters. Speak to any in-house counsel, and ask what attracted them to the in-house role in the first place. Invariably, it was the opportunity to work directly with business groups.

The question becomes how a company or, even a business unit brings in the in-house lawyers to work on business and commercial strategy. One way to do this might be to partially decentralize the law department and place some in-house lawyers within business units. In order to understand business strategy under complex operating conditions, the in-house lawyer needs to feel the pressure of managing risk, while still furthering the business strategy.

In short, for in-house lawyers, to maintain their relevance and their value to the company, stepping outside the traditional legal counsel role is an imperative. Business leaders in companies would be wise to seize this opportunity, and look at ways in-house counsel can give their business a competitive advantage.

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