If the role and purpose of the in-house legal team is too vague or uncertain this can result in mismatched expectations and skewed priorities that undermine the good work of the in-house lawyers, leading to a lack of direction and poor morale, not to mention frustrated ‘clients’.
What do we mean by purpose?
Isn’t the purpose of the legal team obvious? After all, the team is always busy (too busy perhaps) and our business colleagues know that we're there to deal with the legal issues in the organisation. If there’s demand for what we do we must be needed and valuable.
Well, yes and no. It matters that the General Counsel (GC) and the team are clear about their role and direction. Without these it’s too easy for the team to focus on whatever hits their desks next, emphasising short-term priorities at the expense of what’s most important so that business-as-usual can feel like an exercise in fire fighting.
Determining the purpose of the legal team is not a five-minute desk exercise. Rather, it requires discussion and thinking. The aim is to clarify expectations, objectives, targets, priorities, methods and responsibilities so that there is clarity and consensus about the team’s purpose. This can then be codified, not as a fixed, unchanging charter, but as a practical working guide.
Here we consider a simple five step plan to clarify purpose.
Step 1 – Understanding and managing expectations.
Step 2 – Mapping activity.
Step 3 – Aligning objectives and priorities.
Step 4 – Clarifying responsibilities.
Step 5 – Setting out the purpose.
Step 1 – Expectations
Much of the work of defining the purpose of the legal team will fall on the GC, not least because clarifying their own role and responsibilities will go a long way to defining those of the legal team generally.
It’s important for the GC to understand the expectations of the board and senior management. If the legal function is well established, there may be a tendency to think that its role is clear. But this may not be the case (including because boards and management teams change over time).
In discussing expectations, there may be no surprises. But, even at a senior level, there may be misconceptions about the role of the GC and the lawyers, which the GC can help dispel.
Expectations vary, but here are some of the common ones regarding what the GC’s role should include:-
- Managing and controlling the cost of external counsel.
- Advising the board and management team on relevant legal issues and risks as a contribution to their strategic and business planning.
- Giving proactive legal advice so that issues are highlighted and managed earlier.
- Facilitating smooth business process and avoiding surprises and delays as a result of legal or regulatory requirements or change.
- Ensuring compliance with all relevant legal, regulatory and ethical standards and highlighting when these are at risk of being breached.
- Protecting the property and reputation of the organisation in its contractual arrangements, litigation and otherwise.
- Managing the legal function (and perhaps others) and ensuring that it supports the changing business requirements of the organisation.
- Managing key external stakeholder relationships – e.g. with government departments or regulators.
- Exhibiting leadership qualities through their high standards, integrity, the management and development of people, and the achievement of business goals through drive and collaborative working.
- Being a legally astute business partner with a whole organisation perspective, a good listener with sound judgement.
There may also be some operational matters such as in relation to levels of service and particular areas of legal advice.
While there may also be some misconceptions (such as in relation to who the GC acts for and the nature and extent of their professional obligations), getting to grips with expectations can be very valuable in framing the GC’s role and that of the legal team. It is part of the GC’s role to discuss and perhaps negotiate these expectations so that they are reasonable and deliverable, framing the GC’s role and responsibilities and forming part of the purpose of the legal team.
Step 2 – Mapping
Although the team’s lawyers may be very busy, the GC needs to know what legal services are being delivered, to whom and at what cost. This means investigating where legal advice is given and whether this matches the areas of highest business need and/or legal risk. For example, if an experienced lawyer is spending a lot of time undertaking relatively low grade but necessary work, there is likely to be a mismatch. It may please the ‘client’ (if they’re not bearing the cost) but it won’t be cost effective.
Mapping should enable the GC to really understand where the lawyers’ input sits in the relevant business process and how it can best add value. Tools which aid the GC in interrogating activity and relative cost will be extremely useful in this exercise.
Mapping can be revealing. For example:-
- It might demonstrate that legal input is pitched right but that the service needs improvement, say in relation to responsiveness or clarity.
- It might identify a legal risk that is being under or over managed because its impact is not properly understood. For example, where a lawyer is dealing with recurring issues rather than finding another way to deliver the information/expertise.
- It could highlight a gap in skills, resources or process.
- It might identify a mismatch in cost to benefit in relation to an area of legal activity.
A good mapping exercise provides important data for an analysis of objectives and priorities.
Step 3 - Alignment
This is about ensuring that legal services support those areas of greatest business need and/or of highest legal risk. There are likely to be a number of relevant factors here:-
- You may need to redraw the team’s objectives and priorities so that these support the achievement of wider business objectives – say, at divisional and organisational level.
- You may need to redeploy lawyers so that they are undertaking more work of a particular type or to take on new work.
- The skills of the existing team may come into focus if you do not have enough of a particular type of expertise. Getting these quickly may be a challenge.
- You may need to find other ways for certain types of work to be undertaken. This could involve, for example, negotiating with a business unit for them to absorb certain low level work, perhaps aided by more training or virtual support.
- You may need to revisit the structure of the legal team if, for example, there is a clear need to move certain lawyers closer to a business area (as business partners) or where there is a need for more centralisation to facilitate collaborative working and knowledge transfer.
- You may need to look at your resourcing generally – have you got enough legal resource of the type you need – in-house and externally – or do you need to make a case for recruitment or some reorganisation of the function to include, say, more flexible resource or technology tools?
- Is your budget fit for purpose? In particular, is the organisation’s legal spend, and the way that planned and unplanned variables are dealt with, sufficiently clear and flexible? For example, does Legal carry the entire legal spend budget or do some business areas carry their own for internal and perhaps external spend? How is demand for new legal work dealt with and is the business planning and budget setting process sufficiently linked?
The aim of an alignment process is to have a better match between the objectives, goals and targets of the legal team and the wider divisional/organisational objectives. Apart from representing a more effective use of resources it will also allow the legal team to more easily demonstrate its value and allow individual lawyers to recognize their contribution to wider business targets and achievements.
Step 4 - Responsibilities
While job profiles and responsibilities change and evolve, there is value in setting out the understanding between the GC and the organisation (essentially the board and senior management) about what their role encompasses. This, in turn, will help define what the legal team generally is there to do. Clearly, all GC roles are not the same and are influenced by what the organisation does and by its culture. Here are some of the possible issues to be clarified:-
Status and involvement of the GC
- Will the GC sit as a member of the executive or senior management team? This will dictate whether the GC is to operate in a senior leadership role or whether the role is more about (just) managing the legal function.
- Is the GC expected to be involved in strategic and business planning or will their focus be more operational and transactional?
- What involvement will the GC have with senior management and the board? Will they be seen as a trusted adviser or will the relationship be more arms length?
- What part will the GC play in the organisation’s governance and structures? For example, will they be a member of, or attend, board meetings or sit on other business committees?
- Who is the GC’s line manager and are there any dotted line arrangements, say to a non-executive director?
Professional responsibilities of the GC
- Is there clarity around the GC’s professional responsibilities and what this means in relation to such matters as reporting lines, client responsibilities and what happens when legal or ethical issues/concerns are raised?
- What business functions will the GC be responsible for – just legal or others as well?
- What are the GC’s people responsibilities and reports?
- What is the responsibility for business planning and budgeting?
- What about responsibility for stakeholder management?
Accountability for legal advice/services
- What are the key areas of law to be covered by the GC and the lawyers? Is this all the legal work in the organisation or are there any local arrangements? How are any such arrangements to be managed in relation to instructions, advice and budgets?
- What are the primary legal risks in the organisation and how will these be managed and controlled? What is the organisation’s tolerance for risk in relation to its key business activities?
Service, targets and value
- What is the model for the delivery of legal services?
- What are the key priorities and targets for the GC and lawyers?
- How will the contribution and value of the legal function be measured?
Step 5 – Purpose
Once you have been though steps 1-4 you should have a clearer idea about the role and responsibility of the GC and the legal team. Clearly, the GC will be expected to be heavily involved in shaping these, and the details highlighted are merely indicative of the areas to be considered and developed. For example, service delivery is likely to extend into ancillary matters such as service level agreements and KPIs.
Step 5 involves codifying the purpose of the legal team by setting out the compact between the GC and the organisation. It could cover the following areas:-
- The mission of the GC and of the in-house team. This can be as short or as extensive as preferred but it essentially captures what the legal team is for, its headline responsibilities and its perceived value.
- The role of the GC and legal team. Their responsibilities in more detail and how they contribute to the wider success of the organisation.
- The measurable value of the GC and lawyers. The basis on which they are evaluated, including, for example, in relation to ROI, protection, compliance, workflow and ethical practice.
- Governance. As well as normal reporting arrangements this could cover arrangements for allowing the GC to raise issues of poor or unethical practice and non-compliance.
ACC - Establishing the In-House Law Department: A Guide for an Organisation's First General Counsel Updated July 2012