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What would a business do?

If you ran the legal department like a business, would it look the same? It all starts with the product. Any successful business sells a product that is valued by a market. If it is not valued by the intended market, it doesn’t necessarily mean the product is not good. It could mean the product is not being marketed as well as it could be, ie the market is not seeing the value that it offers. Equally, or alternatively, you may have a misalignment in the product understanding, ie people may be using or wishing to use the product for purposes for which it was not designed or intended – thus creating a misalignment of expectations.

Product Alignment

Get your product right and align with your market. You don’t necessarily need a service level agreement (SLA) but something like this is a great start; just like a product comes with technical specifications, warranty, and terms and conditions of sale, you wouldn’t have a business selling its product without those things. An SLA doesn’t need to be prescriptive; it could be value based. For example, it doesn’t need to say, “We will respond and resolve your request within X days.” It could say, “When you need legal support we will prioritize your request based on risk, importance to the business, strategic alignment with business goals, and urgency. Based on the above, your matter will be addressed relative to the other requests we have received, etc, etc. Like Batman or Mary Poppins, we may not be there when you want us, but we will be there when you need us.”

Part of success here is being open and honest about what is possible and can be reasonably achieved having regard to your resources and the demands on them. Any person in sales will tell you that one of the worst situations they deal with is when the product doesn’t do what it says it does on the tin or is being short-supplied to miss delivery dates.

Demand Management – Demand Outstrips Supply

Critical to meeting demand is understanding your supply capacity and distribution model which dictates how quickly you can produce, in what volume, and how fast. Get this wrong and you have a constant short supply. Can you imagine a business operating without an ordering software platform? It seems insane! Yet only recently have legal departments really started to embrace software to assist with managing ‘orders’. But of course, orders in a system then need to be linked with production and distribution to identify when that order can be supplied; and if the production line is at full capacity, there is a substitute opportunity cost to get that product manufactured earlier in time. And this is where product alignment is key. If you establish strong relationships with your customers and have set clear expectations around order placement and fulfillment, you are far more likely to deliver in full and on time and have happy customers. This is aspirational rather than wholly achievable in my experience - I’ll take incremental improvement!

Supply Focus – High Value Product and Efficiency

Ultimately, the objective of a business is to deliver shareholder value. As a legal team, your shareholder is the business and the departments are your market. Take for example a business which, like most legal departments, is: (a) selling product as fast as it can make it; (b) the product is highly price elastic, so if you increase the price demand drops off massively (for legal there is obviously no cost at the point of usage hence I make this rule); and (c) if you cannot increase production in the short term to boost sales, how do you increase value? Well, try and increase the profit margin. For example, if you have a range of products, focus on producing the higher margin products. What about the lower value? The first question is: “Is this even a product legal should be selling, ie is this a market we wish to play in?” Just because legal sells it currently doesn’t mean it should sell it or that it is the only department that can. A lot of in-house ‘legal work’ could be done by non-lawyers or by other means. This leads to another obvious way to increase profit, which is to drive efficiency gains to cut the per unit cost of production. This can be about resource allocation (right bums on right seats doing the right work), cutting wastage/replication, standardization, and substituting capital for labor (where it is more efficient to do so).

Ask yourself, does this work need a lawyer? Just because we have too much demand, are more lawyers the right answer? It might be, it might not. Why are my lawyers having to ask for basic details to assist? Why are my lawyers spending loads of time managing ‘orders’ rather than executing them? Why are my lawyers doing loads of admin and reporting? Why are my lawyers correcting grammar, formatting, commercial details drafting? Should legal be doing this work and if so, could it be done by non-lawyers, more heads, lower cost, faster turnaround? I hazard a guess that there are efficiency opportunities if you look for them.

Legal Disclaimer

This is really a thought exercise, and the above is by no means perfect and of course one can pick holes left, right, and center. But in my experience, I have found the greatest successes I have had is when thinking this way. I’m not saying this will work for everyone or anyone, but it works for me. Next time you are wrestling with the legal department operating model, perhaps ask yourself, what would a business do?

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