As the global competitive landscape is transformed by digitisation and globalisation, so too is the role of GC being redefined. How can today's GCs stay relevant for the future?
No one could accuse the typical general counsel of getting an easy ride. A decade of skyrocketing regulations, pressure to reduce legal expenditure and a need to embrace new processes and technology, has imposed a heavy burden for the GC to bear.
Absorbing the skills necessary to perform the modern-day GC role takes some doing. The Corporate Legal Operations Consortium (CLOC), a corporate legal professional network, identifies 12 functions that ‘optimise’ legal services delivery. These include an understanding of data analytics, technology support and service delivery, and alternative support models.
Few of today’s GCs would have ever considered these as desirable skills at the outset of their careers. Now, they are essential.
Yet, as the legal profession continues to inch along a transformative path, GCs are developing these multifaceted skills to ensure that their departments meet expectations and budgets.
Perhaps the most significant change of the past decade has been a move away from the paradigm of GC as subject matter-expert and trouble shooter.
"The lawyers who get the headlines are the ones that ‘ride in and slay the dragon’, says Bruce MacEwen, the founder of Adam Smith Esq, the consulting firm. He says many lawyers are still largely reactive and are financially rewarded for being so, but with the weight of regulation and legislation that has ramped up following the financial crisis, businesses are having to pay much closer attention to compliance and pre-emptive measures.
This is something that doesn’t necessarily come naturally to lawyers. “Which law school teaches preventive law?” asks George Beaton, the founder of consultancy Beaton Global. “You won’t find one.”
As in house teams have grown and the scope of their role evolved, so too has expectation upon GCs to be the custodians of an effective, efficient, business-enabling function.
Irrespective of the increasing importance and influence of legal functions, the scepticism among Chief Executives and Finance Directors concerning the value delivered by legal persists.
Many GCs looking for cost savings have already harvested the low-hanging fruit. Panel consolidation, greater deterrence of 'off-panel' arrangements, and the expansion of in-house teams has all yielded results.
And yet, 60% of organisations allocate legal spend inefficiently, according to Acritas’s annual SharpLegal study, involving 2,000 interviews with in-house counsels in organisations around the world. It suggests that GCs should look to allocate at least 40% of legal expenditure to the business’s own internal legal function, but any more than 70% would typically reduce efficiency.
In mature legal functions, the role of GC is becoming increasingly concerned with operational productivity.
George Beaton likens the situation to that of the automotive innovators of the 20th century. He says GCs should immerse themselves in all the key components of operational management, in much the same way that the great automotive innovators of the 20th century familiarised themselves with all elements of the production line to revolutionise production.
Understanding the process by which legal service is being produced is key to driving greater efficiency, and can also improve the reliability of the end product.
Bruce MacEwen, the founder of Adam Smith Esq, the consulting firm, agrees that GCs will often discover that outsourcing legal work is more economical, especially when it involves matters that are not the core competence of the company itself.
The good news is that GCs now have wider choice than ever before. Hybrid resourcing models are evolving, relying on a more nuanced mix of: permanent in-house resource; flexible contract legal resource; outsourced resource to private practice law firms; and a wider use of New Law businesses, technology vendors, legal process outsourcing businesses and more besides.
The consequence, however, is that the GC must now become the architects of the right model for their organisation. Further, they will need to be able to better integrate a wide range of skillsets and specialisms aside from core legal expertise.
Head of Client Strategy
A GC with a broad skill-set and a deep understanding of the business, its operations and core processes, is perfectly placed to deliver that next wave of evolution.
Michele DeStefano is a professor of law at the University of Miami and the founder of LawWithoutWalls, an organisation that helps law students to develop the necessary skills to succeed in the modern legal profession.
She believes that GCs are going to be much more rounded individuals in the future, potentially having multiple qualifications including law and business degrees, and having performed varied roles in businesses, giving them the skills that are aligned to both innovation and risk management.
She suggests that GCs will need to be especially adept at project management and leadership, while maintaining extensive industry and technological knowledge.
Mr MacEwen echoes the sentiment. Given the rise of a range of alternative resources to deliver legal services, he expects to see a greater prominence of non-legal professionals in legal operations. “I think GCs deserve a lot of credit for knowing what they don’t know and bringing in experts that do, and getting out of their way”, says Mr Beaton. He believes that turning to talented non-lawyers, consultants and ‘technology savvy’ individuals can significantly enhance the value of in-house legal teams.
Mr MacEwen says that it is imperative that these experts are brought in and treated as equals, that there should be no division between lawyers and ‘non-lawyers’. He believes there are plenty of examples of non-lawyers successfully heading process and technology driven practices in law firms and in ‘new law’ organisations. However, delivering scale of that change will not be easy and require wider perspectives.
Michele DeStefano, the founder of LawWithoutWalls suggests that the relationships between GCs and their external legal advisers are also going to have to change, with external counsel taking a more consigliere type role in their dealings with clients.
The traditional arms-length relationship involving briefs, return letters, clarifications of the brief and then letters of engagement is too stilted and sterile, Mr Beaton suggests.
Although many GCs have reduced the number of law firms on their panels in order to better-leverage their purchasing power, few have sufficiently leveraged the simultaneous opportunity to drive better collaboration and sharing of knowledge with a trusted inner core of advisers.
A trusted core – internally and externally – can do more than simply provide a 'market view' on particular issues, or better contenxtualise advice to the client. They can also be better-relied upon for introductions, recommendations and horizon-watching for new tools and resources that can further enhance delivery models.
Alastair Morrison, Head of Client Strategy at Pinsent Masons, says GCs and their private practice cousins have not just the opportunity - but the duty – to do so. Lawyers have typically been used as an emergency service, but new technology and working practices afford the opportunity to build fences at the top of the cliff instead of providing the ambulance at the bottom.
Says Morrison, "A GC with a broad skill-set and a deep understanding of the business, its operations and core processes, is perfectly placed to deliver that next wave of evolution".