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Building High Performance Departments

By Catherine Kemnitz.

Today’s GCs struggle with increased demands and smaller budgets. Facing an avalanche of legal matters, they need an ever-increasing range of in-house expertise to meet a highly variable workload, yet budget pressure renders hiring a wide and deep bench impractical. The COVID economy has only amplified these issues, escalating enterprise risk at a time when companies have grown increasingly cost-sensitive.

Innovative GCs are responding to this new normal by transforming the way legal resources are aligned to legal matters. They are building agile legal departments with lean full-time teams to provide managerial scale and handle core competency work. This leaner team is supported, almost entirely, by a bench of trusted, on-demand lawyers for as-needed expertise, workload surges, and ongoing matters.

Many other GCs are just beginning their journey to flexibility. These in-house leaders are embracing the learnings from COVID and engaging on-demand lawyers for open positions, instead of investing in full-time hires, to better

support the changing demands on their teams.

No matter where GCs reside on the spectrum of flexibility, they all share a recognition that a blended team of full-time and on-demand lawyers minimizes risk, maximizes the value of the in-house team, and optimizes spend. As the economy reboots for growth, these leaders understand that flexible talent is not only the modern approach to hiring, but is also the key to building high-performing legal departments.

Optimizing Spend

Let’s pull up for a moment.

The very first step toward understanding where and how GCs all along the spectrum can inject their team with flexibility, is to better understand the cost structures of their various types of talent. To date, that has not been an easy comparison as salary alone is a woefully insufficient and incomplete measure.

There are a host of costs with any full-time lawyer, which include but are not limited to, equity-related costs, benefits and taxes, bar association fees, facilities and related overhead costs, training and development expenses, hiring and recruiting, exit spend, and more. Other factors such as geographic region, industry experience, tenure, and practice area specialty also substantively influence spend per lawyer.

In order to build a high-performing legal team, GCs must first understand and account for the hidden costs of legal hiring. Only then, once they have calculated for all the factors which contribute an internal hire, can they effectively and accurately compare the cost benefits of employing in-house lawyers versus engaging equivalent flexible resources.

Shining a light on hidden employment costs does more than just enable an accurate one-to-one comparison – it provides GCs with a better picture of the cost benefits of more directly mapping their talent to their needs. Indeed, every individual full-time hire needn’t (and shouldn’t) be compared to every individual flexible resource. Instead, the real cost of a full-time employee may be thought of as a bucket of additional budget. That budget can be used more efficiently on a single flexible lawyer, or it can be effectively divided and deployed across multiple on-demand lawyers to address numerous workstreams and sub-specialty needs.

Optimizing Risk and People Management

Cost alone, however, will never be the yardstick by which GCs measure departmental contribution, progress, or performance.

True legal value involves the optimization of spend (per above), but also risk, and people management. All three are equally important measures that reveal the benefits of transitioning from fixed to flexible talent:

Risk Management:

Unprecedented legal issues often emerge suddenly. Legal departments that rely on full-timeemployees alone do not possess the speed or flexibility required to address emerging issues in a fast-changing marketplace. For example, the legal talent the GC needed in March of 2019 looked very different from the expertise required in March of 2020, and that looks quite different from the expertise required in March of 2021 and beyond. As a result, any hiring decisions the GC makes outside of the core competencies of their team would be based on previous expertise needs.

As events unfold, legal talent must change just as rapidly. GCs must be able to match the right in-house-ready talent to current legal matters in a real-time and reactive manner. Legal departments with access to an already-integrated, flexible bench have the muscle memory needed to seamlessly respond to an unexpected event at scale. The ability to sync resources to a fast-changing landscape significantly enhances risk management and measurably improves legal outcomes.

People Management:

GCs must also consider how to create value through the operational management of their talent. A blended team of full- time and flexible staff drives enhanced value creation. The integration of flexible lawyers within the department ensures that the core team remains focused on the work that directly aligns to the strategic objectives of the enterprise. In addition, leaner permanent teams create more growth opportunities for talented lawyers within the internal structure. Investing in flexible talent also mitigates the attrition issues with which many legal departments struggle. The costs of replacing internal hires and retaining external counsel in the interim can be steep. Moreover, it typically takes over six weeks to fill an open legal position, and 11 weeks to fill one at the managerial level.

A well-honed bench of flexible talent, composed of lawyers with institutional knowledge of the legal department and the organization it serves, can immediately and seamlessly onboard to fill gaps while mitigating attrition issues.

Finally, hiring is a significant commitment. Flexible talent provides a “try-before-you-buy” cushion, giving GCs the opportunity to assess the types of softer skills that are only appreciable once a lawyer is in-seat. Trialing talent before converting that lawyer to full-time employment is not only an overlooked benefit to flexible talent, but is also a risk- mitigating, pragmatic model for legal team hiring.

How to Start: Three Steps for Building aHigh-Performance Legal Team

Most legal departments leverage all three pillars of the larger legal ecosystem:

• Full-time employees: A GC and lean team of legal lieutenants hired around the core competencies and strategic requirements of the business

• Law firms: Retained for bet-the-company matters, including select deals and specific litigation scenarios

• Flexible talent: A network of vetted, curated, in-house-ready, on-demand lawyers to flexibly respond to real-time needs

The highest-performing departments are those that balance more weight on the most flexible pillar. While experiments with on-demand talent may seem antithetical to the conservative nature of traditional GCs, pilot programs help mitigate perceived risks. Building a flexible talent pilot involves three steps:

Step 1: Identify Positions Primed for Flexible Talent

• Review the internal legal organization chart

• Identify which open positions are core-critical, requiring embedded subject matter expertise and institutional knowledge

• Identify open positions that are well-suited for flexible talent:

- A second-level need for a competency that already exists within the full-time team

- Unexpected demand for critical, but not continuous, expertise

- A new initiative, project, or transaction requiring a surge in support

- Open positions that have not otherwise been labeled core-critical

Step 2: Design the Appropriate Pilot Program for Enterprise Success:

• Consider the best executive for pilot ownership, given the specific enterprise environment:

- A pilot owned autonomously by the GC

- A co-sponsored initiative with the CFO

- A pilot in cooperation with the Legal Ops team Communicate the intent of the pilot to stakeholders so they become co-advocates of the initiative

• Carve out a budget dedicated to hiring flexible talent: If working with the CFO, ensure that the budget allocated to the pilot will be returned to the legal department for general spend, regardless of the outcome of the initiative. Design a pilot that does not fiscally penalize experimentation, but instead, rewards it with additional investment if successful

• Commit to a specific time, investment, and funding plan: Legal will invest in flexible talent for the next “X” non-core-critical open hires over an “X” period of time. Transfer a portion of law firm spend to help fund the pilot

• Calculate success: Develop and measure pilot outcomes against defined KPIs

Step 3: Engage the Right External Partner To Build Pilot. (That partner will help:)

• Identify positions and legal matters best primed for flexible talent success

• Scope and design the pilot program Create a budgetary framework to compare costs between flexible and full- time lawyers for specific open positions

• Establish benchmark KPIs, beyond cost, to measure pilot results

• Access the right flexible talent for specific pilot needs


About the Author

Catherine Kemnitz is the Chief Legal Officer of Axiom, the global leader in high-caliber, ondemand

legal talent.

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