Pearl Moses, head of Risk and Compliance at the Law Society, explains how you can make the business case for your legal team as effective as possible.
Why have an in-house legal team? Many organisations outsource their legal work, and one could ask what is the value of having lawyers in-house? What particular skills do they have that might move a business forward? It may not always be obvious, but the business case for having an in-house legal team is a valid one.
Role of the in-house lawyer / legal team
The role of the in-house lawyer is changing – in the recent past, legal teams might sit in separate offices with a particular legal remit, but in the last few years they have moved on to work as partners in the decision-making processes of organisations.
Now more than ever, the role of the in-house lawyer is multi-faceted. On top of much other work, in-house lawyers are required to:
- provide legal services to the business
- structure their work and the legal function to support the objectives of the organisation
- identify and manage legal risk, and the reputational risk it poses to the business
- deal with increasing regulation and the burden of compliance (ie GDPR)
- where necessary, sourcing additional legal services.
In addition, organisations are asking more of their legal resource – and asking for it more quickly, at less cost. All these pressures influence the way in which in-house lawyers must work, and the shape of the response that they must deliver.
Know your business
In-house teams need to think of themselves as part of the business. You have a legal specialism, but effectively, your objective is the same as every other employee – working to help the business be successful. The only way you can add value is if you understand the organisation or business you work for.
Lawyers have a unique perspective on risk, but it is only with that detailed understanding of the business that you can say whether or not a risk is worth taking. Being able to couple your strategic legal advice with a detailed knowledge of the business means that you can be a valued business partner.
The success of in-house teams depends on their ability to meet the requirements of the business and align with it, both strategically and operationally. In order to thrive, the legal department needs to position itself as an indispensable resource, otherwise it risks being sidelined or, at worse, outsourced.
The internal reputation of the in-house lawyer should be built around creating value for your organisation. That means that the legal team should deliver against what the organisation decides is important. Value is measured in terms of delivery of an organisation’s strategy – make sure you are aligned to that.
Know your CEO and colleagues
It’s your responsibility to make sure that when you are invited to meetings that you fully participate, not purely as a lawyer, but as an integral member of the team demonstrating a commitment to help the business achieve its objectives. You will only gain the confidence of your colleagues if they know you understand the business and are invested in its success.
Talk to as many people as you can. Find out:
- What are their challenges?
- What projects are they working on, and why?
- What are the organisation’s strategic objectives?
- What underpins that strategy?
- What are they worried about, and what do they want from Legal?
Remember the in-house relationship is an unusual one, in that your employer is also your client; and it is imperative that you understand the client’s perspective. Talk to your CEO – if you focus on their areas of interest initially, this will gain you enough traction to be able to do what the business needs.
Understand the appetite for risk
It’s also important to understand how risk is treated in your organisation. Ask yourself:
- Where does risk sit, ie who owns it – IT, internal audit, another risk department etc?
- Is there an organisational risk register and, if so, how do you engage with it?
- What is the overall risk culture in the organisation?
There can be a tendency within some organisations for business units to transfer risk to their in-house legal teams by encouraging or placing pressure on Legal to make commercial decisions. Remember that the role of in-house legal counsel is to understand the pressure / pain points, strategy and objectives of the business, and effectively communicate the risks and legal issues involved in any decision to the organisation. This enables management to make informed strategic choices within an acceptable legal risk profile.
Balance risk with your ethical obligations
Recent research from University College London (UCL) on in-house lawyers, ‘Mapping the Moral Compass’, has found that there can be great pressure to make or endorse decisions even when, ethically speaking, they are wrong. The UCL research found that 10-15 per cent of in-house lawyers had experienced ‘elevated ethical pressure’, while nine per cent felt ‘saying no was to be avoided, even when there is no legally acceptable alternative’.
Much of what the in-house lawyer does is balancing risk. Ethics play a role – and a dialogue with employer businesses on the ethical responsibilities of the in-house lawyer should help to clarify the position of the in-house legal team. The regulator expects a certain level of ethical conduct, and you should be challenging the business to see the value of higher standards.
Demonstrating value to the business
The issue of demonstrating value is one which can allow the legal team to show how it operates, what it does to protect and enhance the value of the organisation, and to ensure that it is managing appropriate legal risks.
Every in-house legal function should understand its strategy, and use a formal framework to devise and record it. This means that it can be shared and agreed, both within the legal team and with the broader organisation. The In-House Lawyers Toolkit (Law Society, 2014) includes a short checklist to clarify what you mean by value. Summarising their criteria, you could look at the following:
If you and your colleagues already have a definition of value (delivering or adding), then you can use this as a yardstick to measure your services. If you rate yourself as a 7/10, then you can close that gap by unpacking what you’re missing.
Elements of added value
If there is no value concept in respect of legal services in your organisation, you (and your legal team) can discuss potential areas likely to be perceived as delivering or adding value, before talking to your colleagues.
Identify what is important. When you first discuss these with your colleagues, identify those items that are important to them. Are you looking at ‘value’ in the same way?
Document the results of each of your discussions to identify gaps and differences in priorities across the organisation.
What metrics are you using? Agree a measurement methodology with all parties involved for any added value elements that are agreed for implementation. Sometimes, this may require a pilot scheme to test the elements, or measurement can form part of the continuous improvement processes you already have in place.
Set up a communication process, so your measurements are communicated to colleagues and the organisation. Ensure that you know your audience and that you are communicating in language they understand.
In-house lawyers need to take into account the regulatory environment in which they work. With a new SRA Handbook on the horizon in 2019, the Risk & Compliance Service will revisit the changes next year for Inside Out.
The Law Society and the Risk and Compliance Service have resources that will keep you informed and up to date. Our Advisory Service can help you to develop and implement your own approach. Book a diagnostic session with us via email (email@example.com) or ring us on 0207 316 5655.
The Risk and Compliance runs half-day seminars, Regulation for In-House Lawyers, and a new series will shortly be announced for 2019.