Corporate legal functions are increasingly challenged by a growing gap between the resources they are allocated and the demand for legal services. This scenario is familiar to many leaders in the field: regulatory, litigation and transactional costs increase dramatically but legal resources (headcount and budget) remain fixed or are reduced. This challenge existed before the pandemic but has only been exacerbated since.
There are a number of potential solutions, including offshoring, outsourcing and alternative fee arrangements. The reality is that there is no single silver bullet. Rather the solution is likely to be a package of measures implemented according to a well thought out plan. Above all, it is critical that the solution is sustainable (since demand is unlikely to decline in the near term). Providing that sustainable solution package starts with a foundational exercise which can be described as “winnowing”.
A business colleague and friend reminded me a while back of an old English word, “winnow”. “Winnow first referred to the removal of chaff from grain by a current of air. This use was soon extended to describe the removal of anything undesirable or unwanted (a current example of this sense would be "winnowing out outdated information")” (merriam-webster.com). That seems quite apt.
In essence, “winnowing” in this context is about identifying a legal team’s core value to the business and figuring out how to deal efficiently with the remaining tasks – here I am focusing only on the legal work which remains in house, not the highly specialized support provided by outside counsel.
As befits the complexity of the challenge, this is not the work of a moment or an agenda item for a team call. Typically, I would lead this exercise at an offsite meeting over a couple of days with significant onsite follow up work to share and implement the resulting work plan.
To begin, the team should reflect on its role and where it adds most value to the achievement of the Company’s business objectives. Next, the team develops an inventory of all the different types of support the team provides to the business and an estimate of the time spent on each category of tasks. (I am pretty confident that you will find some surprises even at this early stage in the process – proofreading anyone?).
Having identified that core value proposition the question for the team is: how well is that aligned with what the team is actually doing (the inventory)? Is the team focused on the more complex or innovative legal work? From an efficiency standpoint, those tasks that are not aligned with the team’s core value proposition belong elsewhere. But where is “elsewhere”? That depends on the type of activity.
You may find that there are some activities which are not even legal in nature such as my proofreading example. These are classic low hanging fruit that can and should be handed off. Beyond that it gets more complicated but of course, that is where the greatest efficiencies will be achieved. Transactional tasks which do not require a great deal of specialized knowledge and can be outsourced to an LPO and standardized. Legal research, too, can often be efficiently outsourced. Assessing the risks related to a particular task is also helpful in this winnowing process – low or very limited risk tasks may be managed by non-lawyers or outsourced at a considerably lower cost. Finally, consider whether there are activities that, in order to stay within the financial constraints set by the CFO, should simply stop.
To deliver the desired efficiencies all stakeholders must be on board with this process. Being frank with the team and the business about the necessity for a reset, an endorsement of the core value proposition by both the business and the legal team and securing a collective commitment to implement and live with the outcome are all vital.
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