Business models are changing fast. Legal and compliance must keep up and adopt a more agile, business-focused approach.
“As the rate at which businesses adapt gets faster, legal departments will need to rethink how they provide valuable services to the organization,” says Abbott Martin, research leader at Gartner.
In 2020, the corporate value of the legal function will be determined by the speed at which legal guidance, adjusted for the business’s risk appetite, is built into strategic decision making
“In the years to come, legal function success will increasingly be measured by the ability to enable new business models and transform laws and regulations into operating procedures. This requires five key shifts in legal’s current operating model,” says Martin.
Those shifts will ensure legal is effective in the digital age, delivering on imperatives to protect the business while enabling its growth and transformation.
Cost focus to agile strategic support
Organizations today must rapidly experiment with new business models while still managing underlying legal risks and protecting core assets (e.g., intellectual property, brand, reputation). Legal departments traditionally proved their value by performing legal work and meeting corporate objectives at a lower cost than outside counsel. Going forward, legal will need scalable solutions, what Gartner calls agile strategic support, moving away from direct advisory support. In 2020, the corporate value of the legal function will be determined by the speed at which legal guidance, adjusted for the business’s risk appetite, is built into strategic decision making and made available within operating processes.
Legal service manager to enterprise capacity builder
To provide this strategic support, legal departments need to deliver real business intelligence. That will mean less time spent on routine work and more on developing insights from legal information. In the process, legal can build more cost-effective capacity within the business to perform what was previously routine legal work — systematizing legal tasks such as contracts, employment issues, advertising and marketing reviews. The opportunity for legal to standardize its work is ripe — 63% of in-house legal work is repeatable, fact-based decisions that involve no subjective judgment or interpretation.
Centralized control to business partner ownership
More decentralized decision making means business-unit leaders and employees will have ownership of formerly “legal” decisions. In-house counsel must therefore codify legal judgment to increase the enterprise’s ability to perform, learn from and reduce the cost of legally informed decision making. To make this a smooth shift, legal will need to set clear decision rules and parameters that enable business partners to apply legal guidance to their daily workflows and handle issues independently.
Direct service to in-channel product delivery
In-house legal departments can consider their legal support to be the “product” delivered to business partners. To be valuable, the product must be relevant and easy to execute, just as any product needs to resonate with customers. The product should incorporate scalable solutions directly into business workflows. From there, legal can assess client use patterns to find opportunities to become accessible to a larger majority of users, while redirecting clients appropriately for more complex matters.
Law firm relationship model to flexible provider networks
Today, more than half of total legal spend goes to outside counsel. To shift the operating model, legal will have to reduce that dependency. To start, legal should bring in new skills, competencies and technologies that will enable the execution of specific sets of legal work. These include analytics, design, project and vendor management. By bringing skills and technologies in-house, legal departments will be positioned to reduce the amount of outside counsel spend over time.
By 2020, the success of legal departments will be gauged by their ability to embed systemized guidance into operations and provide the legal support business partners need to make better decisions at the pace of digital business.