It’s a familiar complaint across the business–that the Legal Department is really the Department of “No.” It doesn’t need to be that way. But how can legal teams be a better partner to overall business goals? At the closing session of the recent UnitedLex Summit, which focused on “The Power of Partnership,” members of C-Suite representing various industries discussed the importance of partnering with their internal stakeholders outside of the legal department. They highlighted several ways to accomplish that goal.
Build trust through collaborative problem-solving
It’s not enough to say “no” while pointing out legal risks. In-house counsel must move beyond being gatekeepers who block initiatives which involves engaging in conversations that explore alternatives. This creates a culture where executives proactively seek out the counsel of in-house attorneys rather than avoiding them.
It isn’t just legal that struggles with this–those in Finance Departments do as well. Nick Hinton, Chief Financial Officer at UnitedLex, said “In my function, we have to be able to say ‘no,’ but I can’t just say ‘no.’ I have to say ‘No, but what about this? What about that?’”
Renee Meisel, CEO of UnitedLex, agreed that a collaborative mindset and earned trust is critical. “When you build an open relationship, where you can speak and debate freely, it becomes about trust. When you just say ‘no,’ that’s the end of the conversation,” she said.
Risk tolerance must match the business
Lawyers often apply their own risk thresholds when advising their colleagues. Instead, they should align with the enterprise’s risk appetite by understanding business goals and what the organization can tolerate.
Said Meisel, “Strategic alignment is really important. I was lucky to come up in a big legal organization where there was a lot of focus on identifying the role that we wanted legal to play in the company overall and how we could strategically fit in the business,” she said. “A big part of that was teaching our lawyers how to calibrate our risk tolerance to the enterprise’s risk tolerance instead of having each lawyer act in a silo and dole out legal advice or negotiate a deal with their own personal risk tolerance.”
According to Meisel, that requires building relationships and proactively reaching out and understanding business goals and objectives at the highest levels.
Manage costs from a revenue perspective
Chris Fowler, Chief Operating Officer of Rio Tinto, said it has been extremely useful for him to get a clear understanding of total legal costs and consider those within the context of other priorities. “If you can pull together a proper total cost of legal, it allows you to have a proper conversation around trade-offs. Where do you want to invest? Where don’t you want to invest? Where can you commoditize?”
Hinton suggested dividing the legal department’s costs by the company’s margin to understand the true revenue equivalent. “This helps you appreciate how much harder it is to generate revenue than save costs,” he said.
Fowler told in-house counsel that they should expect pushback on budgets, which legal departments aren’t necessarily used to. “You can’t expect not to be challenged. Every other function in the organization is going to be challenged because actually every pound you can save has an EBITDAR impact,” he said.
Develop a commercial point of view
As lawyers, it’s critical to always maintain ethical standards, but it’s also important to keep the business needs and goals in mind. As moderator Henry Goodwin, a Partner at Leo Capital, said, “It’s a delicate balance between the need to be obviously cost conscious, help drive revenues, and create value with the need to be ethical.”
To accomplish this, in-house counsel needs to bring their own perspectives, not just legal analysis. That requires understanding margins, revenue impact, and business realities. As Meisel, a former general counsel herself, pointed out, she wants insights and not just facts. “It really has to do with thinking about the outcome that you want to achieve, plotting paths forward, and being able to educate or get educated about the various risks and costs,” she said. “It’s really important that you not just give these options, but come with a real point of view. That’s really valuable to a CEO who can look at his or her GC and ask, ‘What do you think? What is the right path forward?’ We might not agree, but I definitely want to hear that.”
Step beyond a strictly legal role
In order to enhance their value to the organization, in-house counsel should take a broader view of their role. This can include integrating with corporate affairs, considering reputational implications, and thinking about data as a strategic asset rather than a liability.
“In this day and age, it helps to embed the function in the broader enterprise,” said Fowler. Working closely with corporate affairs is one approach, since that can provide unique insights into reputation management, for example. “If the corporate legal department is going to be successful in a broad sense, it has to have a role beyond purely legal.”
Goodwin advised in-house counsel to also rethink the ways they view data. “There is a generation of lawyers who have been taught that data is a liability, not an asset. We’re reframing the relationship. This is especially true when AI solutions arrive. You will have to be comfortable with data in order for those to succeed.”
As the UnitedLex Summit concluded, the importance of partnership was clear. That’s why UnitedLex’s mission is to be the business partner for legal, with the goal to work tirelessly to align legal excellence with business objectives. If you are looking for a true partner for your organization, you can learn more here.
