Legal Value | Law Department Value | Argopoint

Argopoint has worked with corporate legal departments to develop tools and strategies for successfully communicating the value of legal initiatives and practices to their corporate colleagues.

Demonstrating Legal Value to Corporate

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Corporate legal departments play an essential role in their business organizations.  Whether securing and protecting intellectual property, steering management through mergers and acquisitions, managing product liability suits, handling labor and employment issues, counseling other business areas or performing one of countless other necessary functions, legal departments are integral to the survival of any large organization.  However, legal departments sometimes run into difficulties communicating their value to corporate leadership and other business areas.  Unfortunately, non-legal colleagues sometimes hold the dangerous misconception that their legal department is simply overhead.  Due to differences in training, prior work experience, professional vocabulary and acumen, corporate and legal are not always completely aligned, particularly regarding budgetary issues.  Argopoint has worked with corporate legal departments to develop tools and strategies for successfully communicating the value of legal initiatives and practices to their corporate colleagues.

Management by objective works - if you know the objectives. Ninety percent of the time you don’t.
— Peter F. Drucker, Leading 20th Century Management Thinker

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Demonstrating Legal Value to Corporate: Objectives

While corporate legal departments are aligned with other colleagues around the goal of maximizing stock price and profit, they often have a different approach to demonstrating value from their colleagues in other areas of the organization.  Professionals in the legal industry tend to bring a risk-averse mentality.  Attorneys often measure success through risk management and mitigation rather than growth opportunities and innovation.  In-house attorneys are usually focused on minimizing legal exposure through securing and managing appropriate legal representation and ensuring compliance with the law, whereas corporate is often focused on increasing revenue and reducing expenses.

While legal departments exist as a necessary expense in the corporate world, a growing number of high-functioning legal departments are taking innovative steps to drive cost transparency and predictability, reduce expenses and introduce metrics to measure outside legal service providers.  For in-house attorneys charged with managing multiple legal matters while steering a broader corporate legal strategy, taking the time to justify legal initiatives in a business context can be seen as an unnecessary burden.  Being able to successfully communicate legal department value to corporate can alleviate budgetary pressures, generate corporate support for legal department initiatives and help other business areas understand how to better utilize the services provided by their legal colleagues.

Demonstrating Legal Value to Corporate: Overview

Measuring the value provided by a legal department is no simple task.  The concepts of savings and spend in the legal context carry somewhat different meanings than they do in other services.  Traditionally, spending more on “elite” law firms has been viewed as a safer and wiser decision than awarding business to a second tier firm.  However, an often drawn false corollary is that spending less on legal services is always risky; or that spending more is the only way to secure qualified and appropriate legal representation.  In-house legal professionals sometimes disagree on the most appropriate sourcing strategies for selecting outside counsel.  Given the complexity of legal services, it is not surprising why non-legal colleagues often fail to grasp the true value of their legal department.

High-stakes legal engagements can last months, if not years, which can complicate a legal department’s ability to track spending patterns.  Through strategic initiatives, legal departments sometimes select alternative fee arrangements (in place of the billable hour), or otherwise incentivize greater efficiency within law firms.  However, while moving to an alternative fee arrangement can often lead to cost savings and provide greater cost transparency, it can also complicate the task of calculating cost savings.

Similarly, the global factors that drive increased legal activity are typically outside the control of a legal department.  A legal department may aggressively defend or license intellectual property.  However, a legal department does not control when competitors or other plaintiffs may choose to sue.  The lack of transparency into legal spend and fluctuation of legal activity can cause corporate professionals solely focused on “cost savings” to be inappropriately excited by high savings numbers that are simply a symptom of increased litigation.  Similarly, corporate may sometimes be frustrated by low savings numbers, which are a reflection of less litigation, and therefore, a healthier company.  Due to the complexity of these issues, clear and deliberate communication is often necessary when demonstrating legal value to corporate colleagues.

Demonstrating Legal Value to Corporate: Solutions

Though substantive nuances often provide legal departments with some degree of autonomy, corporate executives continue to have expectations of their various departments.  Legal departments that have been able to rationalize their spending patterns and are typically better positioned to bridge the communicational gap between legal and “business.”

Argopoint has worked through these issues with legal departments across a range of industries.  Our clients have a range of concerns and sensitivities regarding their relationships with their corporate teams.  Our approach provides legal departments with a framework and tools for identifying key business considerations within a legal department, developing a communication plan and delivering key presentations.  Whether running financial models that quantify legal value, reasoning through strategic issues or creating presentation materials, Argopoint has helped legal departments communicate both the legal and economic implications of their practices and processes.  Our recommendations have enabled general counsels and other senior in-house to attorneys communicate critical legal issues ranging from department-wide strategies and goals to specific tactics used by individual practice areas.  Bridging this communication gap has enabled our clients to secure the necessary resources and executive support to continue to ensure their company continues to receive excellent legal representation.

Key Questions for Demonstrating Legal Value to Corporate:

1. How has your legal department been successful in communicating legal value to corporate?

2. How has corporate historically expected legal to rationalize its budget?

3. In which areas have you experienced difficulties communicating legal initiatives and value to the rest of your business organization?

4. What lessons has your legal department learned through interactions with other business areas?