In Practice: The year of change unleashed

When the World Health Organization declared COVID-19 a global pandemic in March 2020, the call made change the exigent priority of this black-swan event — an event affecting almost every company and, by extension, their law departments. Indeed, the global pandemic has proven to be a master class on implementing change with a sense of purpose and urgency. And meeting its challenges eradicated any complacency that might permit conducting business as usual.

In March, Thomson Reuters’ 2021 State of the Corporate Law Departments Report took a deep dive into how general counsels and their corporate law departments worldwide fared in adapting to the scale and speed of change that occurred last year. The report also discusses how 2020 exposed the vulnerabilities of traditional law departments and made the business case for modernization: “Any gaps in the industry’s modernity have been laid bare, and law department leaders have a unique opportunity to continue the rate of change in 2021 from how we worked in 2020,” the report noted.

Beginning later this month, we will use the report’s findings as a launchpad for a semi-monthly series of interviews, articles, and guides on how corporate law departments can apply the lessons learned in 2020. The contributors to this series will include general counsels who lead the law departments of companies ranging from brand icons to start-ups, legal operations trailblazers, legal commentators, and more. As the report states, the pandemic “changed the composition of work from business-as-usual to crisis management.” But now that many more companies are moving away from that crisis management mode, what can general counsels and their departments learn from those peers who are reimagining their role with measurable success?

2021: The change agenda going forward

Change became a necessity in how corporations continued to do business throughout 2020, and the law department became a key agent of that change. The ease with which a department navigated the crisis was predicated primarily on two factors: i) the leadership of the general counsel; and ii) the department’s operational maturity. Why? Because, while GCs could not control the pace of disruption dictated by the external events of 2020, leadership and operational excellence had a considerable impact on the capacity to pivot effectively. The series will explore several key lessons and how some of the more modern general counsels and their departments implement them.

These lessons include:

• The general counsel as a strategic business advisor — In 2020, uncertainty reigned supreme. The crisis placed a company’s general counsel as a central figure in steering the organization. The Corporate Law Department report points to the business imperative of having the general counsel and the law department “be a proactive, core advisor” to the company. To fulfill this more value-added role, the in-house legal team needs to do more than identify and mitigate risk; they need to understand the business. We will discuss what, in practical terms, it means to understand the business and how one GC is working closely with her C-Suite colleagues to be better business partners.
• Legal ops as agents of operational excellence — The report notes the sharp increase in the portion of law departments that plan to hire legal operations professionals — rising to 81% in 2020, from 57 % in 2019. This increase is due to the clear and mounting evidence that legal operations are “the driving force” behind many department initiatives, including: i) process optimization; ii) talent management; iii) technology investments and adoption; iv) outside counsel management; and v) budget management. We spoke to legal operations veterans on how corporate law departments can fully utilize the role to best optimize operational excellence.
• Remote work as a retention & productivity tool — The pandemic accelerated existing trends in remote work and virtual communication. The necessity of moving to remote work proved to have significant benefits, including higher productivity and greater flexibility for those employees working remotely. We will explore how to develop a talent strategy for the law department that evaluates the types of roles and teams that forge a good fit for remote work.
• Technology as an innovation & efficiency accelerator — The changes brought by 2020 underscored the pivotal role of technology and process in modernizing the delivery of legal services. The report provides the business case for using technology to navigate rapid change; however, tech alone, without an underlying strategy, is an expensive and fraught approach. We talked to a number of law department operation gurus on why strategy is the linchpin that drives successful tech investments and adoption.
• Metrics and benchmarks as value-enablers — The report also notes that most law departments focus largely on metrics related to facets of their legal spend with (on the high end) 92% tracking total spend by law firm, and (on the low end) 48% tracking forecasted spend vs. actual spend. Although metrics are vitally important, the report made the case that spend metrics alone do not tell the whole story of the law department’s value to the business. We will take a close look into the other metrics that should be employed to create measurable value.
• Law firm preferred panels as value-generators — The top priority for law departments continues to be controlling outside counsel costs, which often represent an average of 60% of a department’s total budget. The report recommends that law departments consider using preferred vendor programs or panels to increase value rather than only to reduce cost. We will identify concrete ways law departments can achieve both critical goals.

The year 2020 challenged long-held notions of workplace norms. It shook every segment of the legal industry out of its sometimes limited and parochial views of “how things are done.” In 2021, general counsels and their law departments can continue to move the needle towards a modern approach to realizing value for the companies they serve. We hope this series will provide a framework to advance the important goal of modernizing today’s corporate law departments.