The new-look legal department
The legal function is increasingly integral to the health and viability of any business or organisation, and corporate counsel across the country are actively working to ensure that function can perform at the highest level.
According to Winc GC and company secretary Troy Swan, there has arguably never been a better time to be a corporate counsel – and not just in spite of it. While neither he nor any other in-house lawyer would argue that the age of coronavirus has been a good thing for legal professionals working within businesses and other organisations, there has undoubtedly emerged greater scope for such professionals to stamp a more lasting mark on those businesses and ensure that the legal function is tied to its success and ongoing viability.
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Creation of that mark, however, isn’t coming easy. It is incumbent upon the leaders of the in-house legal team to wade the choppy waters of the ongoing pandemic to steer not only their teams in this time, but also foster a team that can serve the myriad needs and suitably address the diversity of challenges and opportunities that currently and will soon loom for businesses and organisations of all stripes.
It is indeed an exciting time to be a corporate counsel. But it is also a challenging one for legal departments that will look substantially different to those of the pre-pandemic world.
Looking forward to thrive now
What was once regarded as innovation, Mr Swan proclaims, is now standard.
“What was previously regarded as technology-based innovation or operational efficiency strategies, is now an essential baseline to continue to support your business. The increase in the use of technology and lawyers’ uptake and proficiency with using that technology will be a positive long-lasting change, and while work from home has long been common arrangements for many lawyers, the pandemic has made the provision of flexible working arrangements more common for many other industries,” Mr Swan says.
“As a result, the way we all interact as a business will now change, with some people being in an office environment, some working remotely and some utilising a hybrid or some other pattern that will emerge. Where people are physically located will be less relevant, which also opens up the opportunity of engaging best in breed talent outside localised regions or areas.”
More and more organisations, Pepadaan director Patricia Housden notes, will be looking to employ lawyers in-house rather than – or in addition to – utilising the services of external firms, thereby changing the value proposition and expansive duties of the legal function.
“The types of teams that will thrive will be, as always, those that move with the times – those, which have embraced online technology, those which have embraced social changes, such as allowing lawyers (and, in particular, female lawyers) to work from home and those, which keep in mind that, first and foremost they are lawyers, whose first obligation is to the court; who must comply with the Legal Profession Uniform Law and who have a firm grounding in ethical standards,” she posits. “Very ‘old-fashioned’ stuff, but everything old is new again as we move through the never-ending circle/cycle!”
Such evolutions must continue in a post-pandemic world, Elixinol Global GC Teresa Cleary submits: “In-house legal departments will need to continue to prepare and guide their organisation to take proactive measures to ensure business continuity post-pandemic and in-house counsel will need an even more agile approach to supporting their organisations as the new world evolves.”
Part of that proactivity, USG Boral GC Jenny Rees adds, will mean not only retaining pandemic-inspired changes but also continuing to build digital capabilities – both individual and organisational – “and to move away from relying on situational sharing of knowledge to more systemised approaches, whether that knowledge relates to what individual team members are working on or the manner in which the organisation manages particular risks”.
Such digital efforts, Settlement Services International head of legal Kousai Elali argues, will have to be the “bare minimum” for legal teams moving forward.
“The COVID-19 pandemic has bridged the gap between those solicitors that were reluctant to embrace legal technology and those solicitors that were using technology already. The change has happened. The outstanding question is how did you manage that change? Were you successful? What are the areas for improvement? Efficiency, effectiveness and quality of the legal advice are just some of the key considerations,” he outlines.
Evolutions in the legal function
In times of significant disruption, opening a window for new plans will help the legal function thrive in the future, Ms Rees says.
“Legal functions should capitalise on the opportunity for change and ensure that they are as agile as their organisations and focused on organisational priorities. Now is the time to relook at what the legal function does, why and how they do it and ensure close alignment with the organisation’s strategy. It is also a great time to consider how your legal function partners with external law firms, other legal service providers and uses technology to help deliver legal support,” she advocates.
Ms Cleary backs this, saying that while risk-based approaches will have to be adopted, legal counsel can and should focus on risk in the context of the threat that a given crisis – in this case, a global pandemic – poses to business and society, and not be too reactive or rigid in the subsequent approach.
“The in-house lawyer’s role will be to assist their organisations to withstand the challenges through value addition and creativity, such as supporting the HR function and keeping staff motivated, supporting the business in assessing its risk areas post-pandemic such as business stress issues, potential further reduction in workforce numbers, increased illness rates and measures to support a long-term remote workforce,” she says.
“A strong legal department is always one that puts on its business hat and thinks about more than just the law and this will be even more critical in a post-pandemic world as legal departments will need to continually show their value.”
Mr Swan says a shifting mindset in how the legal function can add that value, stating that “outcome-based working methodologies” are set to increase in popularity as the post-pandemic world looms.
“The use of technology to automate common low-value tasks will increase and digital transformation will be the new normal. The tasks and responsibilities of lawyers will also increase in complexity and nature. Everyday business activities will, therefore, be process orientated and digitised, with the type of issues lawyers advising on increasing in complexity. Lawyers are generally excellent problem-solvers and are therefore perfectly positioned to help navigate organisations through uncertain times,” he says.
“As a result, the nature of the advice sought from lawyers and the type of advice they provide will materially increase in scope. Legal advice will only be one factor they consider, with an increasing focus on the commercial or desired outcome. This will give many lawyers the ability to become more familiar with other parts of the business and play a larger role in their organisations and position themselves as business person with a law degree – a trusted adviser and a business leader.”
What must be remembered, Associated British Foods group legal counsel William Daymond interjects, is that having such familiarity with the business you work for takes time to build up, and that a holistic approach to advice cannot exist without that pre-existing rapport. Or, at least, it is much harder to achieve.
“Prior to joining ABF, I was encouraged to visit the businesses, ‘get in the trenches with them’ to discuss issues and therefore get a better understanding of the business. I was told not to lock myself away in an office and advise [clients] via phone and email, otherwise there was no point hiring another lawyer. Instead we would just brief out to external lawyers all the time. However, we are now required to deal purely remotely, thus limiting the ability to proactively advise the business about issues. Instead you are often required to reactively advise and may be provided things at the last minute for clearance and any advice or recommendations as to changes to labels may be met with hesitation given the limited time remaining to implement the changes,” he reflects.
“Fortunately, I have managed to build a strong relationship with the business over the last 3.5 years. However, for lawyers moving in-house or to different companies during or after the pandemic, it will be much harder to build up that rapport with the business and ensure the right issues are coming across your desk and early on. The lawyers will therefore need to be proactive in building that rapport in this remote environment.”
One other element that cannot be ignored, Mr Daymond adds, is the inextricable nexus between the legal team’s success and holistic wellness. This, he says, is just as important a consideration as any professional task.
“It is a common theme also that legal counsel are working longer hours than they would be at home and sometimes it is hard to separate work life from home life. As my laptop is set up on my dining table, it is often hard to escape from work and often easy just to quickly log on and check emails or complete small tasks,” he muses.
The role of team leaders
Such change – both looming and already underway – must be not only embraced by general counsel and chief legal officers but actively believe in that change in order to breed success.
“Adaptability and communication are key ingredients. Adaptability is an interpersonal skill driven by a legal professional’s natural desire to learn. It is the most effective vaccine against inertia to change. Once the GC is convinced that changes should be made, the GC plays a lead role in the timing and communication of the change to their direct reports, senior management and the board. In the virtual world, open communication has become increasingly important and the GC needs to encourage an open-door policy e.g. via email, mobile phone and virtual meetings,” says Mr Elali.
“It is unfortunate that the global pandemic was the driver of change for many GCs across the globe.”
In addition, a GC/CLO must serve as a moral compass, Mr Swan submits: “The GC therefore needs to see horizon changes and equip their teams and their organisations to adapt to an uncertain and changing environment. Lawyers need to ensure they are the trusted advisers to their organisation and that they are part of the decision-making process.”
“They will achieve this by repeatedly providing commercial and practical solutions to increasing complex problems and driving organisational change. Whether this be driving a change in an organisations’ risk profile, from risk aversion and avoidance to tolerance and management, making the business easier to operate internally through smarter governance of the use of technology, or empowering people to achieve better customer-focused outcomes. Lawyers are well placed to lead organisation change, as we often touch almost every function across an organisation,” he says.
This could prove burdensome for such team leaders on occasion, however, given the decreased physical visibility one will have of their teams, Ms Housden points out: “Coordination and supervision of in-house counsel, who are working outside the ‘standard’ business office, and of their work may become an issue for the GC/CLO. Similarly, the availability of the in-house counsel to meet with employees of their in-house clients [could be problematic]. It may also be more difficult for GC/CLOs to assert their authority over in-house lawyers, who report to them.”
It is therefore incumbent upon the GC/CLO, Ms Rees deduces, to help set an environment of change.
“They are pivotal in establishing the culture of the legal team, the guiding values and shared sense of purpose that help connect team members to each other and the organisation. GC/CLOs should also ensure they carve out time to look beyond the current firefighting and consider the different ways legal support can be provided,” she says.
“The concept of legal operations in the US (running the legal function like any other part of the business) is said to have arisen in response to the 2008 financial crisis. GC/CLOs should be looking at how they can continue to provide quality legal services at lower cost and with better results.”
Part of that change, Mr Daymond inserts, is ensuring that issues are appropriately filtered down to the right legal counsel in the team, and efforts are made to avoid simply forwarding on an email. Instead, active connection with that professional will be key, he says.
“The GC/CLO has the established relationship with the business and will often be the primary point of contact for new issues raised by the business, especially in circumstances where the business doesn’t know who to raise it with in the legal team. Due to the heavier reliance on legal technology, the GC/CLO has a role in not resisting change and also helping convince the business to take up the new technology,” he argues.
Perhaps most importantly, however, is the duty of the GC/CLO to showcase value to the organisation in times of crisis, Ms Cleary determines.
“The GC/CLO needs to be calm, measured, nimble, practical and proactive in a time when others are stressed, not thinking clearly or being purely reactive and not considering the long-term needs of the business. The GC/CLO should be taking steps to provide the business options, they should be creative and think outside the box as well as continually considering continuous disclosure obligations if in a listed environment,” she explains.
“The business doesn’t want to hear ‘no’ or ‘I can’t help you’. The GC/CLO should be proactive and saying we can share the pain and the cost that the business is experiencing so we won’t do XYZ anymore but with limited resources we can focus on this area which is critical for the business and its longevity.”
All legal counsel must step up
The burden of responsibility falls on more shoulders than just those of the team leader, however. Legal counsel sitting underneath the GC/CLO must also adapt to the evolving environment rather than adopting a “business as usual” attitude, Ms Cleary posits.
“Counsel should be flexible in their approach and proactively thinking about capital, contractual obligations, managing and supporting suspension of business, dispute resolution, compliance and governance, privacy and cyber security with a remote workforce and supporting the critical needs of the business. Don’t sweat the small stuff,” she says.
Mr Daymond agrees, noting that legal counsel should not wait for change, they should learn how to help drive the necessary change: “The GC/CLO should not be expected to have an understanding of all of the legal technology available or have an intimate knowledge of the day-to-day issues faced by the legal counsel. They should voice their opinions. It shouldn’t be taken as an opportunity to complain but instead propose solutions to problems or ways to improve.”
Moreover, counsel have to ponder what they are doing and why, Ms Rees adds: “Is it work that should be done? Is the work aligned to the organisation’s strategy? Should the work be done by the legal team or by someone else in the organisation? What value is being added by the work? And is there a better way to do it?”
From the GC’s perspective, Mr Swan outlines, counsel must work on being the trusted adviser by proactively offering support and guidance. This somewhat depends, he adds, on the team leader having built a culture whereby counsel see themselves as “business people with law degrees” who can help clients achieve their objective while managing risk as opposed to acting as obstacles to progress.
“They should generally try to adopt a ‘no-blame policy’, where they are not critical of people who may have not done things perfectly and use every touchpoint as an opportunity to increase the legal IQ of the organisation. They should adopt technology as a tool, become digital natives, fully understand the organisations in which they operate and think with a commercial mindset. And most importantly they should support their colleges and teams around them and create a work environment of choice,” he lists.
Such an adopted mindset, however, must come quickly, Mr Elali stresses: “Planning for change allows legal counsel to predict their clients’ future legal needs. GCs are not fortune-tellers but their teams’ very existence depends on future (contingency) planning.”
“An in-house legal team will be well placed if they closely monitor the information available on the internet be it by way of news feeds, articles, commentary, research databases and social media. There is a lot of information out there. The broader business appreciates a proactive legal team that delivers anticipatory advice,” he said.
Predictions for the future
Regardless of the age of coronavirus, Ms Cleary surmises, successful corporate counsel are those who are “proactive, ingrain themselves in the business” in becoming trusted legal and business advisers.
“That is what differentiates in-house lawyers that the commercial business sees as a cost centre and therefore disposable and those the business wouldn’t think of letting go. Australian in-house legal departments will be working harder but will need to evolve to ensure their workloads are sustainable and to ensure they still enjoy the work that they do,” she says.
Mr Daymond and Ms Rees agree, with the former noting that while the legal department will not be the same as it was pre-pandemic, those that can “maintain a close relationship” with the business will survive and thrive. Ms Rees adds that that will necessarily mean focussing on their organisation’s strategic priorities, measuring what they do, documenting how they do it and continuous improvement. Legal departments that do this will thrive as their business colleagues will understand the value they deliver and, as a result, the team will feel recognised”.
Such changes and reinforced values bode well for the next generation of corporate legal leaders, Mr Swan believes, as those professionals will have a “commercial or entrepreneurial streak” and will understand not only the legal framework in which to operate, but also that technology is a critical tool for such operations.
“Legal teams will continue to grow as businesses identify that lawyers are well placed to advise on bespoke complex issues as more common tasks are removed by process improvement or automated. The scope and reach of lawyers will increase, from being subject matter experts, to crisis managers and business advisers based on their good judgement and strong skill set,” he concludes.
“There has never been a better time to be a lawyer than now.”