The key components of legal department management: beyond the basics

Progressive and well-managed law departments can make a real contribution to their organizations. More than 25 years of advising legal management tells me that there is a significant correlation between a CLO/general counsel's experience in the company and vital law department contributions to corporate priorities. In other words, a top-notch in-house department makes for a more effective company.

But getting there usually takes time. After about five years, relationships have been forged with the CEO, CFO, and business units. Legal resources have been secured, and the mix of inside and external counsel is now carefully balanced.

Industry sectors vary in their demand for legal services: increased regulation, threats to intellectual property, industry consolidation, privatization, and litigation, to name a few. Yet, five features of law departments are vital to be well-managed.

Organizational alignment

By considering the company’s corporate business plan for the year and a 3-year time horizon, a law department can be more selective about the work it takes on. Roles can range from policy advisor, regulatory and compliance specialist, custodian of the IP portfolio, deal negotiator, risk and litigation management. Discussions with the corporate leadership and business units are essential. Law departments must be part of the business unit planning cycle and participate throughout the year.

In some settings, law departments prepare service-level agreements with primary business units to define the scope of legal services anticipated by inside and external counsel, standards and protocols for access and turnaround of legal services, and cost management.

Another aspect of organizational alignment is further articulating corporate objectives and goals with implications for services from the law department. These are then reduced to writing by the law department so that initiatives can be agreed and tracked.

Deployment of law department resources

Law departments are part of a company’s intellectual capital. They should be appropriately leveraged for maximum effectiveness. Beyond serving as legal relationship coordinators for each central business unit, lawyers and staff must be challenged and expected to acquire new skills and knowledge.

Creating centres of legal expertise, often in tandem with preferred external counsel, is rarely a formal process. Individual lawyers will too often work up to 90 percent of the hours on a legal matter, with insufficient reliance on colleagues in the department or the managed use of external counsel. The most effective law departments rely on legal service teams to support business unit objectives – essentially, a degree of internal leverage to improve service delivery and knowledge transfer.

Law departments rarely know enough about the complexity, frequency, and distribution of their work. Few departments have matter management systems to track activity and the source and type of legal work. Fewer still want time-keeping systems. There are less complex ways to analyze the work.

Investing in the department’s legal resources calls for competency-based tools to balance legal capabilities and business priorities. Competencies are an amalgam of knowledge, skills, and attributes that lawyers are expected to acquire as they reach different career milestones (entry, intermediate, expert and management). Competencies typically cover four areas: personal attributes, leadership, business/finance, and legal.

Management of initiatives and priorities

The combination of carefully chosen initiatives affects every lawyer and legal service user meaningfully. Initiatives are discussed and planned annually with corporate and business unit leadership, and progress is reviewed regularly. It is a given that professionals and legal leadership never have spare time and can never get caught up with all their work. Still, companies and their business units have targets and deadlines. An effective law department has criteria to guide the selection and timing of initiatives. It monitors the allocation of work to law department members and external counsel. Compliance with service standards, while backlogs are traded off, is part of the continuous triage that defines the dynamics of professional services.

Strategic communications

Too often, law departments are poor promoters of their achievements. Perhaps every artist needs an agent. The company's leadership may have a poor understanding of the diversity and impact of what the law department achieves in its different roles. That is partly why law departments should conduct internal surveys dealing with service levels and results yearly. Surveyed participants receive formal feedback on the survey results and follow-up visits after all significant transactions, litigation and hearings. A careful selection of matters and good timing by the CLO makes strategic communication a key element in effective legal services.

Focus on leading practices

Innovation is the hallmark of an effective law department. Departments benchmark everything from techniques for organizational and human resource alignment to the management of initiatives and strategic communications. They readily participate in benchmarking other law departments' non-financial and financial practices. They rely on primary research and competitive intelligence to learn about and introduce best practices.

Managing beyond the basics requires organizational and legal resource alignment, the careful management of initiatives for the law department, strategic communications, and a focus on leading practices for legal services.