LEGAL
Since 2012, dozens of workshops have focused on increasing legal output and quality while simultaneously reducing costs by using the Smarter Legal Model. These workshops, attended by senior in-house practitioners, range from four hours to two days, from the U.S. to China, and involve all industries and department sizes.
Each workshop starts with the same open-ended question: What’s on your mind?
This discussion identifies the agenda for the problem-solving process to follow (with perhaps some group therapy involved). Despite often feeling isolated and specialized, general counsel (GCs) express very similar challenges around the world, such as:
Forget about in-house being easy compared to private practice; these are uniquely difficult roles due to seemingly irreconcilable tensions between the commercial, operational, behavioral and, oh yes, legal imperatives. These can be summarized: coverage of legal work – essentials and enablers, compliance, client satisfaction, legal staff head count, and net cost – including legal fees, fines and business losses.
In practice, these five imperatives separate into three directions of travel that are universally recognizable: more, less and/or neutral.
These three potential directions mean that the modern legal role has a fundamentally triangular quality, as in Figure 1.
Figure 1: The modern legal imperatives
In-house lawyers do this daily triangulation without even thinking about it: managing the vertical tension to do more with less or striking the horizontal balance between make (head count) versus buy (net cost). Smarter model data shows average insourcing costing $130 per hour versus $442 for the same lawyers in private practice, but businesses often choose flexible external fees over fixed internal costs.
Over 250 Smarter case studies show that legal department performance is often out of balance, as shown in Figure 2.
Figure 2. Imperatives meet reality
These departments are under-resourced and their staff not equipped or deployed to deal with the highest value work; as a result, legal coverage only reaches half of the stakeholders’ needs, leading to several financially significant incidents of legal, contractual, or regulatory noncompliance. The resulting net cost is an excessive combination of regular legal costs, remedial legal work, and compensatory payments or fines. This distorted performance (in orange on Figure 2) is called a “False Economy Model” wherein neither lawyers nor stakeholders succeed.
The Smarter Legal Model’s methodology uses world-class performance transformation processes, metrics, benchmarks, and proven techniques to balance and improve any legal function starting with a five¬-step cycle in Figure 3 that all professionals can apply:
Figure 3. Transforming inefficient imbalance
This process branches out into more sophisticated approaches, including:
Using such techniques, all inefficient imbalances – False Economy and others – are transformed, as in Figure 4.
Figure 4. Imperatives achieved by working smarter
This typical transformation demonstrates that nothing “earns the lawyer’s place at the business table” better than adapting the best business processes to improve the all-around performance of the legal department and thereby the companies they represent.
Originally published in Thomson Reuters Answers On Blog
Trevor Faure is an advisor on legal management and transformation. Faure is president of the Global General Counsel Academy; former global general counsel and leader of legal services, Ernst & Young. The second edition of his book, The Smarter Legal Model, was published in late 2016.
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