Guest article: Meeting the Value Challenge – or How to Manage Legal Services and Deliver Business Value
by David Samia*
In a landscape of rapidly increasing complexity, companies today have to cope with a business environment that is in constant flux. That means individual departments have to become quicker on their feet, speeding their processes to keep the enterprise agile; and corporate legal departments are no exception.
General Counsels and their staffs are under intense pressure to keep external and internal legal costs under control, while assuming a more business-oriented role and increased participation in strategic business decisions. This is a task that is easier said than done as legal departments need to embrace these responsibilities.
Put bluntly, businesses expect demonstrable value from their total legal spend. Legal departments must not only maximize their value to the business but also communicate that value across the enterprise. This means legal departments have to achieve greater visibility into, and control over, the entire legal value chain including internal and external legal resources, activities, and their associated costs. They also must optimize the use of those resources by better organizing and prioritizing work.
Legal Services Management solutions are becoming increasingly popular for legal teams, as they provide a truly integrated solution for managing the delivery of comprehensive legal services to the business. By integrating and unifying all legal activities and costs across the legal value chain, including those associated with outside counsel, legal departments gain increased visibility into their overall effectiveness. More specifically these solutions can measure and demonstrate the performance of an organization’s external law firms by manage spend, results and even outcomes between firms that provide similar services.
The benefits are compelling and include:
· Greater transparency: Enhances collaboration within the business and enables better-informed, fact-based decisions through greater transparency.
· Improved financial and operational performance of the legal department: Helps optimize the use of internal and external resources through improved coordination and control, and more effective balance and use of outside counsel.
· Greater business value: Drives down legal costs and makes more time available to legal professionals to practice law.
Changing the Perception of the Legal Department
Legal departments are indispensable to today’s organizations; yet, they have traditionally been viewed as cost centers that are necessary to minimize business risk rather than a strategic asset that is aligned with achieving an organization’s business goals. Today’s Law departments must do far more than simply protect the business; they must help proactively grow it.
At the same time, legal departments are under intense pressure to control the total cost of legal services, despite the fact that most of those costs go to outside counsel. The result is a challenge that the Association for Corporate Counsel (ACC) calls the value challenge. “The ACC Value Challenge is based on the two concepts: legal departments can use management practices that enhance the value of legal service spending; and law firms can reduce their costs to corporate clients and still maintain strong profitability.”
Addressing the value challenge isn’t easy considering the growing complex business models, a growing number of government regulations, and expanding globalization with highly diverse legal requirements across countries. As a result, legal departments simply cannot maintain the necessary expertise in house and have become reliant on outside law firms to fill the gap. As this gap increases however, so too does the level of uncertainty law departments have with regard to the value being delivered by their firms.
To address this “value challenge”, legal departments must have greater visibility into and control over their legal supply chain, which consists of both the legal department itself and its outside legal service providers and/or law firms. In addition, the legal department has to provide greater transparency to the business as well. That means not only measuring its value to the business but also communicating that value in relation to business goals and objectives.
Achieving a Suitable Solution
For a number of years, legal departments have relied on various technologies to help streamline their day-to-day operations. Matter management, electronic invoicing, document management, and workflow tools are just a few examples. However, these traditional tools are isolated point solutions that result in fragmentation of processes and data that makes it difficult to gain a comprehensive view of the complete legal environment.
Today’s legal departments need a unified solution that consolidates all the legal activities inside and outside their organization. This solution should be similar to an enterprise resource planning (ERP) system that consolidates disparate functions within a company and standardizes them around a centralized system of record. In order to be effective the solution must:
· Provide a holistic view of the entire legal value chain to help legal departments understand and maximize the value they create.
· Increase the productivity of the internal legal staff by automating tasks and processes wherever possible.
· Promote collaboration among internal legal professionals, outside law firms, and legal service providers. The solution must provide greater visibility into the performance of outside law firms and streamline the execution of legal matters while increasing the trust between constituents.
· Provide greater visibility into the legal department’s performance. The solution must enable the legal department to define, measure, and report key performance indicators (KPIs) that can be shared with the business to clearly demonstrate value and increase transparency.
Meeting the Value Challenge
The silos of information throughout the legal value chain – from consumers of legal services through providers – have never been more important to achieving corporate goals; therefore, working harder is no longer sufficient for in-house legal professionals to keep pace with increasing business demands. By managing the relationships between activities and consolidating information, organizations gain greater visibility, coordination, and control of their legal department.
As I’ve mentioned, many organizations are demanding their legal departments expand their role from protecting the business to increasing revenue and enhancing profit. This expanded role, however, is not typically accompanied by budget enhancement. As a result, legal departments are being asked to do more without increasing their budgets. To respond, legal departments need to optimize the business value contribution of their internal and external resources. That is, they need to meet the value challenge.
* David Samia is Vice President, Product Management/Marketing of Bridgeway Software, the most recommended provider of legal enterprise resource planning (ERP) solutions. For more information contact the author at David.Samia@bridge-way.com or visit the company at www.bridge-way.com