How Does The Legal Function Demonstrate Value To Business?
By Mark A. Cohen
This article was originally published on Forbes.com and is reposted here with permission from Mark Cohen.
Lawyers are the legal function’s greatest obstacle to demonstrating business value. Most are intelligent, focused, industrious, analytical, and goal-oriented—desirable workforce traits. So where’s the value rub? Short answer: legal culture, education, indoctrination, structure, insularity, metrics, and hubris. Legal culture is about lawyers, not customers. That’s a non-starter in the age of digital transformation where everything is geared to enhancing customer experience.
Introduction: A business mindset for an expanded legal remit
The legal function is being reimagined to align with the needs of digital companies and their customers. Business and a handful of new-model providers are in the vanguard of the realignment, not the legal establishment. The legal function’s redesign begins from the customer perspective—what is required of legal to better serve its needs?
To achieve customer satisfaction in the digital age, the legal function must understand its customers’ challenges and be part of their solution. This requires law to adopt a business mindset to meet the legal function’s expanded remit. To serve digital companies and their customers, the legal function must operate as a data-driven, proactive enterprise defender and collaborate with other business units to drive enterprise value. But how?
Extracting more from the legal function begins with a cultural reboot and change management journey. It involves the legal function’s collaboration with and adaptation to existing business resources, problem-solving methods, metrics, processes, technology, and data. The focus is on how they can be utilized, refined, and shared not only within the legal function but also across the enterprise. The legal function can no longer be siloed. It must be a part of the enterprise digital journey whose mission is to elevate customer outcomes, value and experience.
To better serve business and collaborate in its value creation, the legal function must become proficient in business language, processes, risk management, data analytics, agility, speed, talent acquisition and management, risks, competition, and customer service. This is a far cry from a legal remit to produce self-proclaimed “excellent legal work.”
Lawyers and allied legal professionals—no matter by whom they are employed—must harness the latent synergy of legal practice and the delivery of legal services at scale. The practice and business components of legal services require different skillsets and workforces but a common mindset. They are equally important elements of the legal function that must operate seamlessly, agilely, and fluidly not only within the legal function but also with other business stakeholders throughout the enterprise. The integration of legal practice and the business of delivering legal services (legal operations) advances law’s functional efficiency. This is a foundational pillar of value creation but by no means the Full Monty.
The second and more paradigm-shifting step in the legal function’s digital transformation journey is its alignment with business to create value to the enterprise and its customers. This involves a holistic reconfiguration of the role, remit, relevance, and reward system of the legal function. Its new Holy Grail is customer satisfaction.
Here are several ways to unleash the legal function’s latent potential to morph from a budget drag and business opportunity bottleneck to a profit center, enterprise value collaborator, and customer pleaser.
Create a legal function that responds to business needs
The legal function must reverse-engineer itself from the customer perspective—how can it meet and exceed customer needs and experience expectations? This requires a no-holds-barred organizational restructuring of the legal function focused on how it can reorganize to better serve a digitally transforming business and its customers. DXC’s legal team provides an outstanding example of legal leading the company’s digital transformation, not lagging.
There is no one-size-fits-all legal digital roadmap; however, common elements include:
Replacing many services with products that include self-help tools and answers to frequently asked questions (FAQ’s);
- Working with corporate IT to create fit-for-purpose tech tools for the legal function and leveraging existing “legal” tools to serve other business units in the enterprise;
- Mining and analyzing unstructured data resident in the legal function for broader corporate use as well as contribution to the corporate data lake
- Evaluating “who does what” based upon data-backed competency, relevant experience, cost, availability, and results
- Challenging law’s legacy paradigms and replacing them with new structures, models, metrics, processes, and workforces that better respond to customer needs and expectations
- Jettisoning artificial lawyer-created distinctions between provider-types (in-house, firm, law company, etc.)
- Providing a platform-driven, agile, collaborative, seamless, customer-centric workforce comprised of diverse resources
- Providing data-backed counsel
- Focusing on value creation to the business and its customers as well as creating a superior end-to-end customer experience
- Investing in workforce upskilling and training to meet that challenge
Establish metrics that adhere to business and operate by them
Peter Drucker famously observed, “you can’t manage what you can’t measure.” Legal metrics have historically been sparse and tied to profitability, not customer satisfaction. Business, especially in the digital age, has a wholly different set of metrics that are customer-focused. Business monitors ease-of-customer access, on-time delivery, successful outcomes, social media reviews, net promoter score and other indices of customer satisfaction/experience .These are the keys to sustainability, scalability, profitability, and brand loyalty in the digital age.
Business places a high value on law’s adaptation of its metrics. The Digital Legal Exchange research found that 97% of business respondents said they wanted the legal function success metrics to be aligned with business goals. The days of the legal function earning plaudits for balancing its budget are gone. To establish value to business, it must adapt to the same metrics applied to other corporate functions.
Harness the power of data
Business runs on data. The legal function must, too. That does not mean lawyers must add data analytics as a core competency. They must, however, collaborate with data analysts, technologists, and other allied legal professionals and treat them as co-equal partners. Seamless, agile, integrated multidisciplinary teams are what is required to satisfy law’s expanded digital remit.
Data is a vast, untapped source of value creation for the legal function. It has the power to replace speculation and conjecture with science-based foresight and insight. Relevant data—information that is material to accurate forecasting, early risk detection and/or mitigation, efficiency, rapid strategy formulation, improved outcomes, and the prevention of “surprise” outcomes (e.g. grossly under-reserved risks)— is a new, underutilized tool in law’s arsenal. Data not only has the latent power to accelerate the legal function’s speed, efficiency, accuracy, and performance, but it can also drive its enterprise value creation. Examples include the application of material data to contracts, litigation, investigations and other commercial disputes, regulatory matters, and IP monetization to cite a few. This is digital law.
Data is not a substitute for legal judgement; it is an enhancer. Data-backed lawyers speak the language of business and are far more credible to the C-Suite than “hunch-based” ones. There is no “legal data;” there is information that resides in the legal function that can be shared with other business units to solve “hybrid challenges” that drive enterprise value. Risk management, compliance, streamlining contracts to compress the sales cycle, and litigation avoidance are among a host of examples. Each provides the legal function with enormous potential to create and prove value.
From cost-center to value-creator
Business has traditionally regarded legal as a corporate opportunity blocker and cost center. That’s changing. The C-Suite recognizes the digital imperative applies to the legal function just as it does to other business units. Without its adoption, legal cannot meet its expanded remit to serve as: (1) a proactive corporate early- risk detector, risk mitigator, and problem solver; and (2) an active, agile collaborator with other business functions to create revenue and new market opportunities for the enterprise and its customers. Legal functions that satisfy their expanded remit will prove value and enjoy elevated corporate standing.
Approximately three-quarters (74%) of business respondents in a study conducted by The Digital Legal Exchange said it is important/extremely important for legal to create revenues and new market opportunities. They regard legal as a synergistic partner of the business, not as a siloed department focused solely on “legal work.” Legal must leverage its intellectual capital, data, institutional and customer knowledge, expertise, experience, and agility to identify and collaborate with other business units to drive measurable enterprise value.
Superior customer service and experience
Superior customer service and experience are key components of demonstrating and sustaining value. Jeff Bezos likened the provider/customer relationship to a host/guest dynamic; good hosts ensure that guests are welcome, valued, and cared for.
Legal is no different than other corporate functions in how it must consistently deliver, maintain, improve, and empirically demonstrate customer service/experience. A customer service checklist for the legal function includes:
- Adopt a customer-first mindset and apply it to everything you and your teammates do; · ease-of-access to legal products and services
- Delivery reliability, efficiency, speed, value, and transparency
- Customer assistance that includes electronic and human self-help tools/resources
- Eliciting and responding promptly to customer feedback
- Effective data use
- Relationship-building and a long-term customer perspective, not a transactional one
- “Making it right” even when mistakes are made
- Treating customers as the corporate asset they are
- Operating proactively, not reactively
- Recognizing the power of social media and its amplification of positive and negative customer experience
- Constant improvement and upskilling
- Fashioning a collaborative culture that supports other business units to advance customer satisfaction and a positive end-user experience
The legal function cannot prove its value to business unless it aligns with it. That means partnering with other corporate functions and focusing on customers— how best to anticipate and meet their fast-changing needs and expectations. This is the crux of the digital imperative, a tech-enabled re-imagination and reconfiguration of how products and services are more accessibly, competitively, transparently, consistently, and pleasingly delivered to customers. The legal function can and must play an important role in this wholesale transformation of the provider/customer dynamic. Jettisoning the “lawyers and ‘non-lawyers’” mindset is a good first step.
Mark A. Cohen
Unbundling services, embracing remote work, and shaping a people-focused legal industry with Debbie Epstein Henry and Mark Cohen.
Mark A. Cohen discusses how the digital transformation necessitates a focus on customers and how it is a paradigm-shifting journey that must include legal.
Mark Cohen explores why the legal function has difficulty proving its worth to business.