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Combating inflation as a lawyer

Global inflationary pressures are making themselves felt, and no business department is immune to their pinch. For the in-house legal function, it's a great incentive to ensure they are genuinely adding value, not acting as a cost center.

In 1978, Americans were at their wits' end as the dollar spiraled out of control and living prices soared. Thankfully, due to shrewd thinking by the Federal Reserve, American society overcame this period of double-digit inflation and empty wallets. But nothing is forever, and inflation has returned, this time making itself felt in established economies across the globe.

According to the US Bureau of Labor Statistics, consumer prices rose by 7.5 percent in the year January 2021 to January 2022, a spike not seen since the 1980s. Reuters states that the UK is seeing its worst jump in three decades, with prices rising by 5.5 percent. New Zealand is in the same boat, with a 5.9 percent hike, according to Stats NZ. The EU is not faring any better, RTÉ reporting a 7.5 percent rise. We hate to be pessimistic, but the numbers are grim.

You may be thinking, how does inflation concern our InView community? We all know in-house legal teams are fighting hard to change the 'cost-center' label they get slapped with, but that fight is extra pertinent in times of inflation.

"People assume lawyers are inflation-proof, that the business will always need them," says Adam Wardel, Chief Legal Officer at nClouds, but that couldn't be further from the truth. Inflation creates a tighten-the-coffers mentality for businesses, and expensive lawyers are often the first to go.

In-house counsel now more than ever need to prove that legal can be a revenue driver and not just a cost center. (We are looking at you, legal leaders.) "You want to be seen as a hero in the eyes of finance," says Wardel. Sure, inflation may not impact your day-to-day tasks as a lawyer managing compliance and risk, but it has many secondary impacts. A leader should recognize the stress inflation puts their organization under and combat it with innovation.

In short, it's time to trim the fat. We're not just talking about the unnecessary costs in the legal department but across the entire business. Wardel believes there is an opportunity for GCs to step in and help the company out by being, as he terms it, "the bad guy".

You may balk at that statement, as no lawyer wants to be the bad cop. In times like these, however, Wardel believes "lawyers have the authority within the organization to have the hard conversations and not ruin relationships the way other manager or executive level people may do".

Legal is a costly business unit, so creating efficiencies is critical when 'trimming the fat'. If you haven't already introduced legal tech, now is definitely the time to do so. The catch is in the onboarding cost, but Wardel advises creating a business case that shows the long-term cost savings. "If you can prove that you'll save 20 percent costs, you've just beat eight percent inflation."

Legal needs to make sure they are a solution, not a problem. That means getting involved with other business units at an earlier stage, being on the front foot to prevent costly legal issues from ever arising. If legal looks at itself as a tool to make the business much more efficient and compliant, it will inadvertently combat inflation.

Times like these call for what Wardel refers to as "smart business". He advises taking the time to analyze your business operations and compare them with competitors. You want to have your finger on the pulse of innovations in your field, gaps in the market, things you are doing well and things you could be doing better.

Knowledge is power, and in this case it informs a business how they can keep driving forward and reduce costs and operations that don't serve their goals. Wardel applies this same thinking to the legal team. If a task is onerous of counsel's time and not serving a business goal, get rid of it - bring in tech, automate, outsource to an alternative legal services provider.

As counsel, you want to spend as much time as possible working with the executive legal team on achieving goals, not getting bogged down in contracts. Times of inflation call for in-house counsel to step up and prove their worth, to put their critical-thinking minds to use, and to trim the business fat.

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