The rise of the in-house lawyer

In-house practice is booming. Over the last couple of decades we’ve seen more and more organisations establish their own legal function, with many of those teams significantly expanded their numbers and scope in this period. According to Law Society statistics, between 2000 and 2012 the number of solicitors working in-house doubled to 18% of the total solicitor population with predictions that it will rise to more than one third by 2020*. And this is without taking into account in-house lawyers who are barristers or qualified in other jurisdictions.

This surge in the number of lawyers working in-house happened for a number of reasons, but here are just three:-

  • The increasing number and complexity of laws and the reach of regulation, plus the consequences of breach (as shown in several high profile business scandals), made it critical for organisations to have effective compliance and governance systems.
  • Increasing competition required organisations to move and transact quickly and efficiently to protect their business, reputation and brand.
  • In-house lawyers were close, cheaper and they understood the objectives and culture of the organisation.

The changing legal landscape

This rise in the stock of in-house lawyers has coincided, to some degree, with changes in the law marketplace, particular in relation to who can provide legal services, how providers can be structured and who regulates them. Many of these changes flow from the Legal Services Act 2007 with its objective of opening the domestic legal market to increased competition.

This article is not about the pros and cons of a ‘deregulated’ or more competitive market but it is worth highlighting two ways in which these changes have impacted on in-house lawyers:-

  1. There is increased choice available when buying legal services extending beyond the traditional law firm and chambers to newer niche and ‘alternative’ law firms, which may be competitive on expertise and price, as well as other providers of legal and service solutions. This has provided GCs with more options when thinking about how to meet legal need.
  2. There is increased competition for in-house work meaning also that there may be viable alternatives to the way that the in-house team has been providing legal services to the organisation. This should ensure that there is no complacency on the part of in-house lawyers.

Threats to the in-house legal team

Although in-house lawyers have worked hard to provide excellent legal services and find better and more relevant ways to explain what they do and the value that they bring to their organisation, no GC will want to sit on their laurels. Reinvented and revitalised law firms and chambers, as well as other newer players in the legal market, may provide the GC with better partnering and outsourcing solutions, but they may also threaten those in-house relationships that the GC and their predecessors worked hard to cultivate. Here are six possible areas of threat to be aware of:-

  1. Talent and skills. In-house is clearly a popular career choice for lawyers, although many still start their careers in private practice and transfer later. To remain an attractive option, in-house teams need to remain relevant as places where lawyers can grow and develop their legal and other skills. More teams may want to think about taking on lawyers earlier in their careers (perhaps as trainees) and perhaps also providing for different kinds of role to meet developing business needs. It may no longer be relevant for the in-house team to be made up only of client facing legal advisers, rather than those able to carry out business functions in supporting that advisory work.
  2. Quality and service. Proximity to the client does not necessarily mean that the quality of advice and service is of high quality. The closeness of the relationship could itself mask failings which remain hidden until shown up by a change of approach or comparison with an external provider. Consequently, it’s important for the in-house team to take regular steps to monitor its service by seeking feedback and by benchmarking against others. Relying on the client to complaint if they’re not happy is not a progressive model for analysing quality and for making improvements.
  3. Performance. The legal team can be doing great work generally but poor performance in one area will let you down and it’s that that may attract unwanted attention. This can be countered in two ways. First, by rooting out poor performance (whether people or systems) and making sure that it’s corrected, and second, by ensuring that all the good things the lawyers do get the attention they deserve. Make sure that activity reporting is timely but relevant and also that the performance measures you use are clear, relevant and easily understood by business colleagues in highlighting the value and contribution of the team at the expense of ‘busyness’.
  4. Technology. Implementing and upgrading technology can be difficult as it may be dependent on integrating with business-wide systems or require difficult to access budget. While innovating to improve efficiency is not just about technology, no GC can afford to be unaware of how technology options might improve their service, particularly where available at reasonable cost. Nor should the GC be content to be at the back of the queue when arguing for targeted resource to help them do the job better.
  5. Cost and value. While the lawyer’s value may lie in more than what is measurable, it’s critical that the in-house team knows what they do, what it costs to provide the service, and what measurable value this contributes to the organisation. First, it’s unlikely that any other business area will not have a grasp of these and, second, you’ll need to know this when looking at the comparative value of outsourcing options and when arguing for resources as part of the annual business cycle or when ‘negotiating’ services with a client.
  6. Partnering. This is no longer simply a question of having a relationship with external lawyers when outsourcing legal work. It’s increasingly important to know where you may be able to get added value for functions that would enhance the value of the service you’re providing. It may not be viable for the in-house team to operate on a ‘full service’ model, providing not only legal advice but also add on benefits such as analysis and training. Consequently, it may well be increasingly important to know where you can buy in those services which compliment your team’s service. This is an area that could move from being a ‘nice to have’ to being a necessary part of the offering of the in-house team.

The value of trust in the relationship

Part of the appeal of the in-house lawyer is in their accessibility and ability to respond quickly and in the light of good knowledge of the organisation and its people. But the human dimension goes further. Lawyers need good people skills. They may sit just across the open plan office but accessibility without people skills means little. So lawyers need to be good at building and developing relationships. This is not the same as being liked or being ‘one of the team’ – although both help. Rather it’s about being able to provide advice that is relevant, understandable and constructive. Often this will mean facilitating what the ‘client’ wants in light of the legal and risk framework. In this sense, trust is built on the fact that the lawyer has the skills and knowledge to provide what’s needed.

But it goes further. Trust is also about the lawyer being aware of their wider professional responsibilities and bringing these to bear in carrying out their role. They do this firstly by being clear that their responsibility is to the organisation and not to its individual managers and employees. Of course, the lawyer will not want to antagonise colleagues by constant reference to their ‘higher calling’. But it is important, particularly in times of disagreement, for the lawyer to remember that they are not just a commercial facilitator.

Secondly, by upholding the wider obligations to which they are subject – such as upholding the rule of law and being an officer of the court. These are not idealised concepts that have no place in a ‘business’ environment. Rather they can have practical application as reminders that there are important ethical standards to be observed.

Thirdly, by demonstrating the high standards of behaviour that the organisation will almost certainly stipulate and require – for example, by reference to such matters as behaving consistently, with respect, being collaborative and acting with integrity.

Trust is not simply about trusting the lawyer to deliver and do a good job, important though these are. It’s also about establishing clarity of role and purpose. Organisations employ lawyers not simply to do their legal work and advise them about risk and compliance. They’re also engaging people with duties to their organisation and more widely which should mesh with the organisation’s own high standards of ethics and behaviour, including where these also reflect wider legal, regulatory and ethical standards.     

The ethical dimension is consequently an inevitable part of the in-house lawyer’s ‘brand’ which, it is to be hoped, is one of the reasons why organisations value lawyers in their board and engine rooms. And this may be an aspect of the in-house lawyer’s identity that will be increasingly emphasised in the future.

* The Future of Legal Services, The Law Society of England and Wales, January 2016 

To read the next article titled 'Cultural fluency for in-house lawyers' click here.

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