Is Your In-House Legal Team Highly Effective?

In-house legal departments are as varied as the enterprises that encompass them. In structure and operation, some resemble small, midsize, or large law firms, while others look more like a cohort within a startup or a matrixed organization.

From a cultural perspective, departments experiencing only organic growth may embody a culture that evolves over the years with limited external influence. In other instances, departments grow inorganically through one or more mergers or acquisitions, where multiple cultures combine to create a new, collective culture. And an incoming attorney or other legal professional brings unique styles, perspectives, and preferences that shape a department going forward.

Given such variability, how can one fairly assess whether an in-house legal department is effective?

One useful strategy is to hire a legal consulting firm whose consultants can offer a rigorous framework for assessment and comprehensive recommendations for improvement. You also can make an informal assessment yourself. In my experience, you can size up an in-house legal department with reasonable accuracy by looking for the seven attributes described below.

In-house lawyers and their clients may benefit from reflecting candidly on how well the legal team is performing, and making a course correction if appropriate.

Why Assess the Legal Team?

Like other corporate departments, in-house legal teams face challenges endemic to organizational systems, such as scarcity of resources, inefficiencies, talent or skill gaps, and interpersonal dynamics. Yet, holistic assessments of team effectiveness too often are the exception rather than the rule.

In-house legal teams should be assessed for at least five reasons:

1. Corporate legal departments are expensive. It’s been said that “Legal is a cost center.” Even if it qualifies as a profit center based on delivered results, an in-house legal team is costly to support and maintain given the associated operating costs, such as employee compensation and benefits.

2. The services provided by an in-house legal team significantly impact the enterprise. Many legal teams have authority to decide, among other things, which outside counsel to engage and how to utilize them, which can involve substantial spending and markedly influence outcomes. Legal teams commonly manage contracting and disputes for the enterprise; overly-conservative, drawn-out approaches to drafting and negotiations can have a material effect on the business. Counseling missteps, such as failing to fully apprise clients of business and litigation risks, also can lead to substantial spending, liability, and business disruption.

3. Legal departments face dual juggernauts—legal complexity and corporate bureaucracy. The tendency for some lawyers to get mired in legal complexity is formidable enough. Add to that the bureaucratic burdens of the modern corporation and you have a recipe for potential distraction, inefficiency, and paralysis.

4. Lawyers are not known for their management acumen. Talented lawyers are not necessarily natural born managers. Nevertheless, they may be asked to lead legal teams and, due to resource constraints, forced to develop leadership skills by trial and error.

5. Success theater is a common art form. “Success theater” describes a culture in which a team consistently puts a positive spin on performance assessments, rather than openly acknowledging failures or weaknesses. For in-house legal teams that are expert at staging success theater, the result may be to avoid accountability and perpetuate the status quo. 

The next question is, who should make the assessment? While self-assessments are useful, they may be skewed for want of perspective, fear of job loss, and other reasons. As such, it’s wise for others outside the team also to weigh in, such as stakeholders in the enterprise or, in some cases, legal consultants.

The Seven Attributes

In-house legal teams that exhibit the following seven attributes are likely to be effective or highly effective, both in terms of the results they deliver and how they function as a team.

1. The team performs high-value work directed to the right priorities.

An effective in-house legal team keeps a laser-like focus on what has the highest impact to the business. Mindful of the enterprise’s priorities, risks, and opportunities, it continually reassesses whether work being performed truly adds value or merely consumes team members’ bandwidth for the sake of staying busy or “doing what we’ve always done”—and it stops doing low-value work when identified.

It’s also conscious of how team members’ experience and talents are being utilized. To the extent possible, big-picture, strategic thinking should be top of mind among the department’s most experienced team members.

2. The team is a good steward of company resources.

Significant costs frequently are incurred by, or based on the advice of, the legal team. Thus, it’s essential that the legal team practice thoughtful, disciplined stewardship in areas such as department size, structure, and discretionary spend; management of outside counsel and other legal service providers; informing clients of the financial implications of strategic options; and selection and purchase of practice-related software.

Assumptions may need to be tested often; spending that's reasonable at one time or in one context may be unreasonable at another time or in another context.

3. The team’s lawyers solve problems rather than erect roadblocks.

The legal team’s North Star should be to facilitate the objectives of the company in a highly responsive, creative, competent, and efficient manner.

Effective lawyers rise above minutiae, seek the heart of the matter, help parties to a transaction or dispute reach agreement or resolution, and provide actionable advice that enables the business to take calculated risks.

Ineffective lawyers overthink issues, unnecessarily complicate dealings with third parties, and otherwise stand in the way of expeditious problem solving.

4. The team constantly improves and innovates.

An effective in-house legal department doesn’t just deliver great legal advice to internal clients. Because resources are scarce, and habit and bureaucracy breed complacency and complexity, an effective team proactively conceives of and implements initiatives that improve the delivery of services and outcomes. Examples include:

• devising new or simplified processes that allow business personnel to drive generation and negotiation of routine contracts with minimal attorney involvement;

• creating operating rhythms that promote regular engagement between business leaders and the legal team on high-level strategic matters;

• leveraging state-of-the-art technology to eliminate or reduce low-value work;

• architecting and implementing new programs to monetize company technology (e.g., intellectual property licensing programs); and

• developing training programs and processes to promote a stronger compliance culture among company personnel.

5. The team has members with differing strengths.

Much has been written about team collaboration and how to build and structure teams to achieve optimal impact. A consensus has emerged that the closest-knit, most synergistic, and highest-functioning teams include team members of differing strengths, working styles, and personalities that complement one another.

6. The team’s leaders empower, develop, and inspire team members.

Effective in-house legal departments are led by effective leaders.

An effective leader possesses such qualities as vision and thought leadership, clarity of communication, emotional intelligence, and a knack for problem solving and execution of initiatives. He or she sets measurable objectives and accords talented team members autonomy to get the job done.

Effective leaders strive to build inclusive, meritocratic legal departments that inspire team members to partner with one another and pursue excellence. An effective leader understands that his or her personal success, and that of the entire legal team, reach their apex when team members flourish.

Thus, he or she intentionally helps each team member develop professionally by providing training opportunities, offering new challenges, arranging one-on-one discussions to pinpoint areas in which the employee needs or would like to grow, and spotlighting individual and team achievements.

7. The team honestly assesses itself, seeks independent feedback, and effects needed changes.

In an effective legal department, managers and their team members are never afraid to go under the microscope.

They’re willing to take a hard look at their individual and team performance, and when necessary, make minor tweaks or major changes. Moreover, they seek independent input from their client base, others in the enterprise, and external parties.

Relentlessly Pursue Effectiveness

For in-house legal teams that exhibit the above seven attributes to a large degree, relatively targeted actions can be pursued to further raise the bar on effectiveness.

A team can chip away at areas of opportunity to become more efficient, focused, capable, and cohesive. Besides engaging in self-reflection, the team can participate in training or coaching sessions, seek perspectives from peers inside and outside the enterprise, and apply learnings from non-legal areas.

In other cases, the above attributes may be in short supply, rendering a legal department ineffective or even highly ineffective. It may be time for a reset to get the department back on track.

An in-house legal team should be an invaluable asset to an enterprise.

How effective is your team?