Corporate lawyers are having to deal with a big increase in demand for their services, which may sound good for job security but they’re having to do so with no big increase in resources.
The reason for the spike in demand is twofold. First, the way companies now operate demands faster decisions at a time when many take longer than ever and, second, larger, more complex companies mean more legally sensitive decisions are being made. Three-quarters of middle managers now make legally significant decisions and 60% of them make these decisions without understanding the legal implications, according to CEB data.
The common response of corporate legal teams is to give internal business clients custom advice and lots of face time in meetings. It feels good to help colleagues that appreciate the advice, and the attention engenders good will between Legal and colleagues across the company.
But this type of labor-intensive delivery is holding legal departments back. “Demand is definitely outpacing our ability to keep up,” says the company secretary and general counsel of a large UK-based manufacturer in CEB’s network of legal teams. “There’s a need to get more sophisticated and contribute on a risk-managed basis, and to do so more quickly, using less resources, and at a higher quality.”
“Frankly, it’s an impossible challenge,” he adds. The problem can seem insurmountable because the one-to-one approach is not only labor intensive but it creates delays and uncertainty.
White-glove care inadvertently creates more risk for the company by encouraging clients to rely too much on Legal. In-house counsel don’t have the capacity to provide direct support to all the people in the organization that make decisions with legal implications (see chart 1).
Without a change of course, 42% of business decisions will experience operational delays due to management uncertainty, and poor understanding of risk appetite will cause 48% of business decisions to incur losses, according to CEB analysis.
Chart 1: Drawbacks to the current legal model Source: CEB analysis
Time to Change the Approach
If legal teams want to provide their services at the right scale and in a sustainable way, as the business requires, then a new attitude is necessary. The department must move from viewing itself as a service provider to thinking of itself as a team that empowers line managers to make legally savvy decisions.
To make the leap, attorneys must shed some antiquated views in favor of solutions that will give the business more autonomy (see chart 2). The end goal of all this is to codify routine legal decision-making so intervention from attorneys isn’t necessary.
Under this model, business owners will have access to critical legal knowledge needed to make decisions that reflect the company’s appetite for risk. In order to avoid an impending service shortfall, legal teams should adopt this new mentality and its attendant solutions over the next 12-18 months.
Chart 2: Benefits of the new legal model Source: CEB analysis