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The Point

  • Corporate Legal should be aligned with the company’s strategy, and its success or failure in supporting that strategy should be judged by two outcomes:
    1. Legal’s financial sustainability: By disciplined, continuous cuts in unproductive costs, free up dollars for reallocation to spiraling new demands.
    2. Prevention of legal problems: Guided by Legal but executed across the business, proactively head off liability, regulatory jeopardy, and reputational harm from avoidable catastrophes (e.g., Boeing’s 737 Max, GM’s ignition switch).
  • Accountability for financial sustainability and prevention of legal problems requires a proven manager to run Legal. Not general counsels or others whose experience is limited to practicing law.
  • Currently, Legal is isolated from company strategy as a siloed function, whose efforts and resources are deployed in reactions to events. And those reactions are dictated by the legal profession’s blind spots and idiosyncrasies, not guided by meaningful alignment with company strategy.

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The Point

In turning from the current reactive, makeshift approach to Legal, to a financially sustainable and operationally coherent strategy, what options does the business have?

I suggest three kinds. Continue reading

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The Point

The business press and specialty legal press are replete with speculation about how “Generative AI”, ChatGPT, GPT4, and other AI developments might change law firms’ delivery of legal services. Most center their discussion on functionality: How well will they work?

But the likelihood, and pace, of adoption will depend on the answers to two other questions:

1. Will law firms apply such exciting new technology to significant portions of their work now performed by junior associate lawyers at hundreds per hour?

2. If so, will law firms share with clients — by reduced charges — the resulting efficiencies?

Based on my career as a practicing lawyer, and my 12 years as a business executive at Whirlpool and GE (where I worked with and supervised law firms), I believe that the answer to each of these questions is more likely to be “no” than “yes”. Continue reading

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The Point

Part I of this series concluded:

” … In most companies, corporate Legal is a business function without a strategy … without objectives and metrics by which to assess its effectiveness .”

In other words, most corporate Legal functions neglect to target specific results for which executive management can hold them accountable. And they lack measures against which to assess their results (other than generalized cost complaints).

Nevertheless, most corporate Legal functions have what amounts to a substitute for a strategy, implicitly adopted by default. As the article cited in Part I (“The One Thing You Need to Know About Managing Functions“, Roger L. Martin & Jennifer Riel, Harvard Business Review, July – August 2019) put it:

“You have a strategy whether you like it or not … The goal may be implicit … The choices may have emerged without discussion or exploration. The actions may be ineffectual in achieving the goal. But the strategy exists nonetheless.”

So the typical corporate Legal function’s implicit, default substitute for a coherent strategy that actually amounts to a set of tactics:

  1. Respond to events ad hoc; don’t commit Legal to achieve particular outcomes, and
  2. When a legal need arises, simply assign lawyers to whatever task needs doing.

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The Point

In most companies, corporate Legal is a business function without a strategy.

Executive management needs to fix this. Because neither attorneys in law firms nor those in-house have defined what is — and is not — within Legal’s scope of responsibility. And, apart from generalized concern about cost, business leadership lacks agreed measures by which this function’s results can be evaluated.

Unaccountable to explicit performance metrics, Legal lacks a meaningful foundation on which to craft its strategy as a corporate function. (“The One Thing You Need to Know About Managing Functions“, Roger L. Martin & Jennifer Riel, Harvard Business Review, July – August 2019).

So Legal’s prevailing mode of operation, with minor exceptions, is reactive. With attorneys both in law firms and in-house making ad hoc responses to client events. Leaving the business enterprise without objectives and metrics by which to assess Legal’s effectiveness as a corporate function. Continue reading

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The Point

So reports The American Lawyer / Law.com (subscription).

In recent years corporate Legal departments have loudly announced that operational excellence is their new goal. Promising speed of service delivery, lower cost, and enhanced accuracy in work product as results.

Headlines like the one above raise doubts about the seriousness, or at least the staying power, of corporate Legal’s commitment to operational excellence. Continue reading

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The Point

This week a strategy consultant sought my advice about engaging counsel on the legal implications of a project. I explained that her project was in an area where governing law was relatively straightforward. Though attorneys need to do lots of expensive work to address some situations, this project was not one of them.

I cautioned that too many firms incentivize lawyers into framing business issues so as to insert more complexity, more complication, and more uncertainty than the situation warrants. And then bill accordingly. So she needed to carefully select trustworthy, client-focused counsel.

From my email later that day:

” … In connection with my apologies earlier for possible cynicism about having to carefully manage one’s lawyers, the linked tweet from an attorney and technology expert I admire (Alex Su) illustrates why I am so cautious … The law can be an honorable profession, but clients need to be realistic about the perverse incentives their lawyers are working under.” Continue reading

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The Point

Why don’t law firms use a software-enabled platform to automate transaction processes that attorneys typically carry out themselves? For less cost, with more accuracy, and faster than those attorneys can do manually?

Last month Gartner analyst Ron Friedmann put the question this way:

“Over the last 5-7 years, we’ve seen the rise of deal platforms. Have these helped address this problem? I thought this class of LegalTech would sweep the market because it can reduce coordination. But my sense is it has not. Is this read right? If so, what went wrong?” Continue reading

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The Point

1. An attorney’s duty to maintain client communications as confidential is one of the central pillars of legal ethics*. For obvious reasons, this is vital to the well being of a business enterprise.

2. Based on my years as a practicing lawyer — and at other times as a business executive — I believe that government agencies sometimes threaten this important value.

3. It’s up to legal counsel, in law firms and in-house, to zealously defend a corporation’s right to confidentiality. Continue reading

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The Point

Why approach the contracting function as a form of business process management? Two reasons.

First, efficient contracting drives — and ad hoc contracting impedes — cash flow. By making the order-to-cash cycle fast or slow.

Second, efficient contracting enables quick action — and ad hoc contracting creates roadblocks — in any operation where the company collaborates with, or marshals the resources of, a party outside of the business.

That’s from a business process management vantage point, at least. But there’s another approach to contracting: that of lawyers.

From law school, law firm experience, and in-house counsel practice, their view of contracting centers on a request to an attorney, writing a document, deliberation between business person and attorney on terms, then negotiating with the third party about terms, signing the paperwork, and then putting the contract is a file of some kind.

This ad hoc sequence is not a “business process”. And, of course, it’s not efficient at all. Continue reading

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