Legal operations deal with the services offered by in-house legal counsel to an organization in a streamlined and efficient way. Where in the past in-house counsel operated to a certain extent disconnected from the realities of the business, today in-house counsels strive to become as one with the business.
In this article, we will look over ten key legal operation areas that in-house counsels must absolutely consider to be successful in their job and legal operations:
1- Role of an in-house legal counsel
The role of an in-house counsel is to provide legal advice to his or her client. The only difference here is that your client is your employer at the same time. In this context, the in-house counsel assumes a dual role, the role of an attorney or advisor tasked to give legal advice in the best interest of its client and an employee subordinated to the demands and requirements of the employer.
In your capacity as legal counsel, you will advise and make recommendations to your client with respect to its commercial engagements, business risk, compliance matters, human resources and any other legally relevant discipline applicable to the business. On the other hand, in your capacity as an employee, you must adhere to the demands of your employer and work as a team with all the other business units with whom you are tasked to make your organization successful.
This is where the role of an in-house counsel is both exhilarating and challenging as you must operate within the set parameters of your organizational goals and objectives but also have the ability to voice your concerns and sometimes make recommendations that could potentially impact or slow down your company’s growth, expansion or speed of execution.
Defining and implementing an efficient and effective legal operations will allow you to provide legal advice to your organization and keep track of your company’s legal vital signs while at the same time you become a strategic stakeholder in the growth and expansion of your organization.
The role of an in-house counsel is therefore a crucial function to the business and in today’s economy, as lawyers, we must strive to become a strategic partner to the business and not be viewed as a bottleneck or a roadblock to business decisions. The legal operations is the discipline that helps the legal function become an effective component of the organization.
2- Keeping up with what is happening outside
A second area in an effective legal operation strategy is for the in-house lawyer to keep up with the latest legal updates, news, trends and activities both within your organization and outside. In nearly all organizations, the number of legal professionals as compared to the overall size of the business is very small and finite. So the few lawyers and legal professionals will need to find an effective way to stay ahead of the game in a fast-paced organization.
Your company is involved in many business activities and operations at a given time with potential legal consequences and you want to ensure that you are implicated and involved in these either strategic or high-risk operations.
As lawyers, we are trained to identify risks and flaws in a particular business decision. We must admit, we consider that a job well done is a job where you have identified the most legal risks as possible and have a plan to tackle each one of them. On the other hand, the business stakeholders have a much greater level of risk tolerance as us lawyers.
In essence, each company will have a different level of tolerance for business risk and depending its risk appetite, you will need to focus your time and energy to pick your battles where they truly matter.
Even though some decisions will present a higher level of risk, as an in-house lawyer, you must train yourself to work tolerate business risks.
While your organization is expeditiously moving and conquering new territories, the legal landscape is also fast changing outside your organization. A business decision that used to make sense from a legal perspective may quickly change and evolve thereby impacting your business. When the external legal changes present a significant and material impact on your business, reputation and profit margin, you must have a process to analyze what has changed and how it could potentially impact your business.
An effective legal operations will have a process by which it will monitor the external landscape and keep up with the relevant statutory and legal regime changes out there. In the event of a significant change in the applicable laws, it is the duty of the internal legal counsel to verbalize this change, present a recommendation as to the changes or business adaptations needed and ensure new processes and policies are implemented to become and stay compliant.
By remaining on top of the legal changes in the jurisdictions in which your company evolves and by being involved with the other business units in your organization as strategic partner when important decisions are being made, you can then provide counsel and guidance ahead of time and be directly involved in the planning and execution of the business decisions.
3- Doing tasks outside of your law degree
Being a legal counsel in an organization is not all about the law. In fact, you can say that it’s more about the business than about the law. With this in mind, you will be asked to get involved in the business outside of your legal comfort zone in ways that will challenge you.
You will be given projects or tasks that will bring you to learn new skills and abilities and even discover that you have talents in areas outside of the law that you enjoy and are proud of.
For instance, implementing processes and policies is a project management task that will require organizational skills, time management skills, ability to delegate tasks, monitor the progress of the project and take course-correction measures and perform other project management tasks that you may not have been used to purely as a lawyer.
You can look at these tasks outside of your law degree to be undesirable and feel that you are not being used to your fullest “legal” potential. You can also look at these non-legal tasks as channel through which you develop your personal skills and abilities, acquire project management skills, develop a greater relationship with the other business units and be perceived as a business partner.
A good in-house counsel will jump on the opportunity to develop complementary set of skills to bring additional value to the organization beyond the law and thus become a key player and stakeholder in the business.
4- Managing legal costs
The fourth important element in a successful legal operation is to manage legal costs. Legal costs can be the result of internal expenditures and external expenditures.
With the advancement of technological tools and software products, legal department productivity can be monitored in ways that was not possible only a decade ago. By leveraging the proper software tools and services, you can get data and analytics on your legal operations in real-time allowing you to make strategic decisions relating to your costs and expenditures.
In larger organizations, the management of legal costs is typically handled by the general counsel who monitors the expenditures and optimizes the legal operations in such a way to minimize expenses.
The legal department is most of the time seen as a cost center where the business is asked to fund the legal operations without necessarily seeing a return in cash on its investment. When you operate in a business environment, you will quickly realize that the return on investment for each dollar of expenditure is a performance indicator that is tracked by many. If your performance indicators show no return but even an operational loss, you are already disadvantaged when sitting at the table.
Of course, there is significant value in funding the legal operations as the money invested helping the company navigate uncharted territories and mitigate risk, sort of an insurance policy against legal disasters. As they say, an ounce of prevention is with a pound of cure. The advice and guidance given by legal counsel in an organizations is invaluable to the overall success of the organization. The downside is that the value brought by the legal team is difficult to quantify on the company’s balance sheet and income statement.
In essence, to achieve an effective cost control, the general counsel and the company’s chief financial officer will need to work closely to define the legal operational budget and discuss the expenditures considered critical and those that can be delayed or perhaps eliminated.
5- Document management
Another factor that plays an important and integral part of a good legal operation is how effectively your legal documents are managed, stored and archived. You want to ensure that your company’s contractual obligations are properly document but the document properly stored and safeguarded.
During the not so distant past, document management was a manual and labour-intensive task. Today document management can be easily handled electronically or in a cloud environment quickly and efficiently. On the other hand, with the advancement of technology, more and more people are doing business around the world and more and more documents and contracts are being generated every day and every minute.
Some studies have shown that we have created more data in the past fifteen years than humanity had created in the entire history of mankind. This is mind-boggling!
An average legal counsel may receive hundreds of emails per day and many of these emails have attachments and documents that will be reviewed, analyzed and processed.
Having said that, although we can store contracts and data electronically, we now have so much to data and contracts to store that we can quickly get lost if we do not have a proper system in place to manage and track them properly.
In light of an effective contract management operation, you must make sure that you have the ability to quickly assess all current and active contracts and the legal obligations stemming from them. You want to be able to search your entire contract inventory for specific terms and conditions without having to read over hundreds of contracts for this assessment. You want to extract data on any special contractual clause or obligation that you may have contracted requiring you to perform post-closing actions and perform mandatory tasks. You want to extract all your contracts by jurisdiction or expiry date so that you can perform various legal operations associated with this data.
Many legal departments, when faced with the overwhelming task of manually handling their contracts, consider purchasing and implementing a contract management software tool to help them in managing their contract templates, contract versioning during the negotiation phase, their active contract inventory, contract lifecyle and post-termination obligations.
6- Standardizing your contracts
Standardizing contracts is the process by which you ensure your contractual obligations and contracts follow a standard process and adhere to a standard set of policies. This is a great risk mitigating process.
For instance, if your company has a standard template for rendering professional services, then by leveraging the same template over and over, you will not only mitigate the risk of introducing unwanted legal obligations in your service contract but your internal stakeholders will know the rules of engagement when a service contract is signed.
On the other hand, if you do not have a standardized process for contracting, then for every contract, you will need to have a comprehensive process to extract the legal obligations and internally verbalize it, assess your business operations and implement any adjustments or operational processes needed to comply with the terms of the contract and educate your internal stakeholders about how they must manage this single client or customer based on the non-standard contractual terms and conditions.
This is time consuming, tedious and frankly not desirable if it happens too many times. It will exhaust the legal teams as they will have a lot of heavy-lifting to do in handing off the contract and verbalizing the obligations to other business units. Then each business unit will need to digest their newly acquired obligations and implement practices, policies and procedures to be able to comply with them. This is a lot of work from all parties involved.
By standardizing your contracts, every business unit can more easily on-board a client, perform their obligations in a standard way and minimize any possibility of breaching contractual terms.
7- Paperless policies
When we say paperless policies, we mean getting rid of paperwork, copies, duplicates and everything that we refuse to destroy or get rid of. In the past, we used to sign a contract and then made a ridiculous number of photocopies just in case we lost the original. Funny enough, when the contract was needed, in some cases we could no longer find it! Now, we scan a contract, keep the paper version and then print the scanned version several times as we are too lazy to read on the computer screen but end up keeping the printed version somewhere.
As an in-house counsel, you should adopt and implement a paperless policy so that you avoid the duplication and multiplication of your contracts that are by definition confidential. You must have a process by which your people will scan a copy of a document and get rid of the original, unless you have a legal obligation to keep the original document. Your paperless policy should operate within the auspices of applicable legal compliance obligations.
For example, if you sign an original contract with a customer, you may want to keep the original and scan a copy for filing in your active contract repository. If your contract was signed electronically, then you should avoid printing it altogether. Rather, you should save it in your active contract repository and give the right people access to view this contract.
8- Focusing on strategic matters
When implementing the proper legal operations, the efficiencies will be seen in both time and cost savings. By spending less time on manual, tedious and non-valuable tasks, you can now direct your focus and attention to the strategic and most important legal functions resulting in the greatest value-added benefits to the business.
By freeing yourself from the grind of manual labour and valuable time lost in looking for contracts, going through disorganized records and trying to find a needle in a haystack, you can then shine as a lawyer, a strategic business partner and advisor. You will have time to work with the other business leaders in making something great happen.
The time you end up freeing can be used to develop and nurture business relationships and strategic alliances with individuals that can help your legal operations succeed even further.
9- Becoming a profit center
Finally, as a general counsel or an in-house lawyer, where you can achieve a game-changing status in your organization is when you steer the legal department to become a profit center instead of a cost center. Your legal operations can work in bringing value to the business beyond the value of your advice and guidance, we’re talking “cash” value.
A sound legal operation will devise a mechanism through which a lawyer will survey other business units to uncover hidden or untapped possibilities to actively seek contractual remedies or legal compensation for certain acts or omissions that can allow for a possible compensation. Other departments may not flag a situation or circumstances to the legal department and so by actively working with the other units, you will tap into a pool of possibilities to choose from.
By having a good control over your active contractual inventory and properly mastering the contractual remedies or liquidated damages you can pursue, you can engage your in-house lawyers to pursue legal remedies, either statutory or contractual, generating therefore unexpected revenues to the business.
You will of course take precautions and perform your due diligence before pursuing a client, a supplier or a partner as you do not want to burn bridges or tarnish your company’s reputation. Having said that, you can tactfully and strategically pursue possible remedies without burning bridges or appearing as a trigger-happy organization.
In essence, you can interview internal stakeholders on why they terminated a contract with a supplier or a vendor, you can educate other business units to flag certain behaviors, acts or omissions that they would have otherwise not have seen or cared for. By building these communication channels and educating the internal business units on what to look out for, the legal department can then take the lead and pursue the low-handing fruit that may reveal itself.
As you can see, there are many areas that you can optimize and modernize when looking at your legal operations holistically. Every company will be at a different stage in their legal department maturity. However, this does not mean that you should not reassess your operations as new technologies emerge, the markets shift and your business evolves.
At any given time, you will have certain pain points or priorities that you want to tackle, what we propose is that you take a step back and look at your operations globally and implement changes that will bring you the most value in your legal operation development roadmap.
You can adopt any strategy that will fit your company’s budget and appetite. Where we see significant time and cost savings is when the legal operation adopt software tools and products supporting their legal operations. You can have contract management software, lifecycle management, e-discovery, billing and practice management, budgeting and forecasting tools, compliance related applications and platforms and so many other tools available in the market that may be of good use.
We encourage you to think outside of the box. Remember, every organization out there is looking on leveraging technology to automate tasks, increase the quality of their work, optimize efficiency and increase productivity.
If you are not thinking along the lines of innovating and modernization your legal operations, then you may be falling behind competitively.
Sooner or later, you will come to the realization of the inevitable and then make decisions out of desperation, rush or even panic.
Good luck in your legal operations and we hope that this article was helpful in giving you some guidance on things to think about.