June 30 2020
How In-House Legal Teams Contribute Value to Businesses
In the recent GC Virtual Session in collaboration with LexisNexis UK and Radius Law, we were pleased to welcome Louisa van Eeden, Head of Legal Marketing at LexisNexis, who shared some brilliant insights from their recent deep-dive survey into how in-house legal teams contribute value to their companies.
Overview of the research
The legal industry has been shifting significantly in recent years, and often the role of in-house legal teams has been at the heart of this change. GCs have been discussing how to add value as a legal function for a number of years, however the ability to articulate this idea in practical terms is difficult. In order to understand and examine the concept of ‘value’ and ‘value-adding behaviours’ of in-house lawyers, as well how these are implemented in practice, LexisNexis carried out both a quantitative survey and multiple in-depth interviews with senior GCs. This research was conducted at the end of 2019, with more than 340 in-house counsel across a range of sectors and organisations participating.
How do legal teams think they add value to their business?
The first part of the survey investigated how legal teams believed they could best contribute value to their business. Strategic alignment, collaboration and saving external costs all have clear roles to play, with effective risk management consistently at the heart of how legal teams contribute to their business. However, it is the approach to risk management that has changed. In addition to the reduction of legal risk and the protection of brand reputation, the critical way that in-house teams deliver value to organisations is the role they play in protecting and promoting ethical principles, and acting as the ‘gatekeeper’ of the business.
Improved collaboration across the business and direct contribution to organisational strategy, were also seen as equally important as effective risk management. This is reflective of the in-house role becoming more influential and gaining increased visibility within the organisation. Out of the 340 people that were interviewed, 35% held a seat on the board and 51% of them reported directly to the board. This means that only 14% didn't have direct access to the board. Interestingly, cost reduction, innovation and increased productivity were the least cited driving behaviours, although were still significant.
A further trend centred on legal team size. Those in smaller teams tended to rate collaboration and risk reduction higher than those in larger teams, who considered cost reduction to be the key way to deliver value. Throughout the research it is also important to understand the practical ways that value can be demonstrated. Therefore, throughout the research, information was gathered on how these value drivers were brought to life. The overall theme concerned the leveraging of the ‘helicopter view’ that legal teams have of the business to its full benefits. This is key to avoiding the perception that legal teams are separate entities who must demonstrate their value to justify their position, and instead allows the value offered by legal teams to be recognised and attributed back to its source.
Nevertheless, thinking about demonstrating value is not the same as articulating that value in a way that resonates with the business. Understanding the quantification process, and the use of metrics and technology in legal teams to make value tangible, is therefore crucial.
Using technology to demonstrate value
Many teams are successfully using metrics to demonstrate value.
Activity-based metrics: 95% keep track of matters, 93% track number of matters closed.
Productivity and efficiency metrics: 88% use cycle time, 79% use process design (the hours or resources saved from implementing a new process or tech).
Financial metrics: Although reducing costs is considered an ‘easy win’, financial metrics were used comparatively less than others; external counsel spend was one of the least used metrics with only 68% currently using it. Only 20% of teams intend to use a charge-back or utilisation model in the next three years.
Interestingly, a similar question was asked to junior lawyers and paralegals on our Virtual Lunch recently, which yielded slightly different results
Barriers facing in-house teams and their adoption of legal technology
Finally, the research considered how legal technology can be used to demonstrate value. When it comes to legal operations, 73% of in-house counsel also had formal responsibility for legal operations. Two main challenges facing legal teams also became apparent, with 75% in agreement: lack of visibility on what work their team is carrying out, and a disproportionate amount of time spent coordinating their team. It therefore made sense that online productivity suites such as cloud storage and workflow tools were among the top systems adopted. It was also apparent that some tools are of particular use to the legal departments, such as due diligence, compliance monitoring and research and guidance technology. IT management and protection solutions were also considered to offer a high degree of value.
Regarding the barriers inhibiting the adoption of new technologies, 90% of respondents in rolling out changes. 66% said they lacked the time or technological understanding to explore available solutions, and a significant number found it difficult to demonstrate an adequate return on such investments.