As the role of in-house legal teams shifts towards the center of business decision making, the support needed from its law firms and ALSPs is changing. Supporting in-house teams to deliver strategic value and optimize the delivery of legal services is going to be key.
Outside of the US, in-house legal teams are still a relatively recent phenomenon when compared with finance and other functions. It is because of this, their relative size and the nature of the legal specialism, that they have often been treated as special or different from other functions. As a consequence, the legal team is not often subject to organizational design reviews or process mapping. Many in-house legal teams evolved in size and influence through necessity as risks arose or business changes occurred. In the UK and EU particularly, the fast flow of regulation only
accelerated this process.
However, and somewhat inevitably, in recent years the way that a legal function is viewed has changed. As the whole legal team – GC and advisers – becomes more integrated and influential within a business, it is receiving the same attention as other, often more mature and larger departments.
The challenge then for today’s General Counsel or Chief Legal Officer is to ensure focus on the key strategic risks to the business while at the same time giving appropriate focus to the efficient operation of the function, with costs and operations coming under a new level of scrutiny.
Evolving legal teams without increasing cost
As their role modernizes, legal teams have to demonstrate the total cost of the function. This includes the costs of the in-house team and third party costs. Demonstrating cost against the value of enabling efficient business and protecting against material risks is not just an in-house team role. Law firms and ALSPs have to contribute.
Having people with experience of being in-house to understand what that looks like is essential. This experience helps anticipate the request to do more with less or, at the very least, to finance new cost requirements from within the budget of the legal function.
These demands are obviously not new within the corporate world as a whole
and other functions may benefit from an industry-recognized organizational design to enable better understanding of the operation and justification of their costs. Nonetheless, for the legal function it is new and, in some cases, is leading to the rise of the dedicated Legal COO, a strategic role sitting alongside the General Counsel to steer the operational effectiveness of the legal team.
Technological adjustment
The pace of change, predominantly driven by technology and now generative AI, has been felt across businesses. While there was some delay, legal is now experiencing the growing strength of technology. To reduce the risk of technology-driven change being imposed on it or shaped from outside the team, the legal team has to choose its own approach, albeit often this will be informed by enterprise-wide technology constraints and opportunities. Previously in regulated businesses, regulators would accept a sample of 5-10% contracts to understand the
impact of a scenario on a large body of contracts, but technology has increased speed and efficiency. With contract review technology, 100% of contracts are expected to be tested – a great pressure for these businesses.
Growing with the in-house team, law firms and ALSPs can help to shape the expectations placed on AI-assisted law to something realistic, but also compliant and safe in terms of IP, data privacy and other legal considerations. As the evolution of in-house teams continues, law firms and ALSPs will need to support clients as they take up new responsibilities by modifying their approach and shaping their own teams differently. This means it isn’t always about the law, but how legal services are provided to the business as a whole. To do this, the success of law firms and ALSPs will be driven by how well they understand the challenges GCs are facing with their fast evolving in-house teams.
For further information, please contact:
David Boyd, Partner, Konexo
davidboyd@konexoglobal.com
