By Richard G. Stock
This is the thirty-fourth in a series of articles about how corporate and government law departments can improve their performance and add measurable value to their organizations.
It is never too late to innovate. Not every legal professional enthusiastically embraces “change management’ and corporate “transformation initiatives”. But “innovation” seems better aligned with the values and sub-culture of many law departments. In 2018, I wrote "Innovation as a Performance Indicator" [1] and in 2019 “Getting Traction for Innovation in the Legal Department” [2]
For ten years, the Association of Corporate Counsel has been recognizing dozens of law departments for all types of innovation with their Value Champions program. Other organizations have similar award programs. Still, like “excellence”, innovation can be elusive to define, time-consuming to isolate, and counter-intuitive in a risk-averse legal world. The practical benefits may not be readily apparent.
I believe that demonstrating the value of the law department depends on innovation. The General Counsel should be the “innovator-in-chief’ of the department. Like Finance, HR and IT, law departments are enablers to get business done. Service to business units by law departments can be assessed with six factors:
understanding of objectives and expectations
responsiveness/communications
efficiency/process/management
predictable cost/budgeting skills
legal expertise at the correct levels
execution/results delivered
All of this resonates with corporate counsel and with professionals of all types. It is a good place to start thinking about innovation in the law department, but it does not quite pass the Specific, Measurable, Achievable, Results-Oriented, Time-limited test. Ehasoo & Sons (www.ehasoo.com ), an Estonian consultancy focussed on innovation, conducts in-depth analyses of organizational blind spots and capabilities.
Their “audit” maps out the innovation challenges and risks that prevent an organization from achieving its full potential. Ehasoo customizes a variety of audits that can be applied at the law department level: assets and resources, communications and organizational knowledge, talent management, culture and leadership, and organization and structure.
Quite a few years ago, based on the work of E&Y’s Mary Campbell and Andrew Collins “In Search of Innovation”, I customized 45 survey questions that can serve as predictors and indicators of innovation for law departments. Innovation neutralizes boredom. It appeals to the problem-solving and creative dimensions in professionals. The survey / audit also tests for attitude – traits which are particularly valuable in mature organizations, at mid-career, and when times are hard in the market.
The survey questions were answered using a Likert scale:
Five categories were covered. A sampling of survey questions follows, and each is answered on the scale.
Vision and Culture
The department’s vision is clearly defined
Bureaucracy does not constrain the department’s workings
A learning-organization mentality is embedded throughout the department’s culture
People are encouraged to think creatively and challenge the status quo
Passion
Individuals are excited about their work and their colleagues
Individuals are fiercely competitive yet support one another
Individuals in the department are
constantly seeking to establish connections and relationships
The department has a track record of sharing information, resources and processes
The best practices are captured, evaluated, and made available to other teams
Resource Commitment
The department recognizes the importance of human capital, leverages individuals’ skills, and works to cross-fertilize teams to increase innovation
The department’s structures and processes are constantly improving to ensure congruence with key success factors
Measurement and Reward Systems
The department’s leadership is tuned in to key success factors and monitors their performance
Consolidating the Survey Results
Consider the following 15 propositions to anchor innovation in the law department.
Innovation with Strategic Projects
Typically, these are business unit projects with significant impact on the company and significant involvement of inhouse counsel.
The choice of strategic project (s) should be one that is in the corporate or business unit annual plan
The contribution of the law department is evaluated by the business unit using exceeds/meets/does not meet
Innovation for Capacity and Speed
Projects can include efficiency targets, dealing with backlogs, and changing work intake protocols.
There is a detailed forecast of the annual demand for internal and external counsel for other than budget purposes
Performance against the forecast is shared with the members of the law department and corporate leadership quarterly
Innovation for Organization and Resources
Projects can include the elimination of silos and solo practices, a paperless environment, and a reduction in administration time.
There is a commitment to legal project management (LPM) and budgets for all matters over 50 hours
LPM includes phases, tasks, assumptions, percentage certainty, optimal staffing, hours, and schedule
Firms and inside counsel are proficient in LPM
Firms and the law department have a financial incentive to achieve LPM success
Innovation with External Counsel
These projects can include extreme convergence of the law firm supply chain, performance and metrics applied to legal fees, and finding ways to have external counsel invested in the success of the company and the law department.
There is a formal plan to eliminate
hourly-based fees within 2 years
The law department is highly proficient in alternative fee arrangements (AFAs).
There is a financial incentive for firms to embrace alternative fee arrangements
There is a target to reduce external spend by 20% from projected levels over the next 2 years
Innovative Leadership
Projects can include a focus on results over process, the acquisition of business competencies by internal counsel, and ensuring that the GC is available enough to the law department to drive the innovation agenda.
Innovation should be the primary key performance indicator of the law department
Each lawyer should have annual objectives aligned with specific business unit objective(s)
Each lawyer should have formal leadership training.
Innovation in the law department is the key to “staying ahead of the curve” and getting business done.
About the Author
Richard G. Stock, M.A., FCG, CMC is the Managing Partner of Catalyst Consulting. See www.catalystlegal.com Richard can be contacted at (416) 367-4447 or at rstock@catalystlegal.com.