Businesses that include legal functions in corporate strategy can achieve long-term competitive advantages and higher stock market valuations, according to new research from the Massachusetts Institute of Technology.
But while an increased reliance on such data can improve synergy, MIT has also said that sophisticated corporate legal strategy is “far more the exception than the rule”, given that “too many executives view the law too narrowly as a cost or compliance issue, inevitably forsaking strategic opportunities”.
Xakia Technologies commented on this new research, saying the issues mentioned are compounded by the fact that many in-house legal departments are too buried in “routine requests” to play a more meaningful role in corporate strategy.
Nearly half of in-house counsel say they spend too much time “fighting fires” to achieve any real long-term goals, Xakia noted, referencing a survey from the FindLaw Corporate Counsel Centre.
That survey found that just 45 per cent of in-house lawyers said their legal department’s priorities aligned with those of the chief executive, and only 11 per cent said there was “no correlation” between the two.
In order to remedy this situation, Xakia suggested what it said was a “surprisingly straightforward solution”: tracking activity, measuring its strategic value, and making smart, data-driven change, examining what is being done, and why.
“Visualising your matters allows for an analysis of department activity in a meaningful way,” it said in a statement, and suggested categorisation of matters according to what is complex versus simple, and what has low or high strategic value.
“Charting and analysing your data helps you make an informed plan to address this fire-fighting work and free up time for more weighty matters,” Xakia said.
“Armed with diagnostics, you can take action to mitigate your low strategic value workload.”
For complex matters, for example, in-house counsel can look at “unbundling” batches or finding a boutique firm that can provide the specific expertise without “big law costs”, Xakia added, and for simple matters, automation and inexpensive outsourcing can be considered.
“While it is unrealistic to push all of your work into the high-complexity, high-value quadrant, tracking and analysing your matters will help you achieve a balance – and certainly a closer alignment with your CEO’s objectives,” Xakia argued.
Moving forward, they said, tracking your matters’ values can bolster your team’s performance and reputation as you know the strategy and show your value.
“In-house legal departments can be more than just cost centres,” the MIT researchers concluded.
“They can be powerful instruments for generating value and securing a competitive advantage.”