Your Business Can Prevent Liability and Achieve Cost Efficiency in its Legal and Regulatory Function — But General Management Has to Do Something

Half a decade ago Harvard Law School’s Professor David Wilkins announced that the legal industry had entered “the Global Age of More for Less” (see this speech, and this journal article).

The response from all but a few attorneys: Crickets.

Seen in the light of their cost-plus business model, “more for less” just sounded to them like “less” money to pay for “more” time. With a “management” technique that consists of assigning bodies-to-tasks, the legal industry is blind to process efficiencies, competitive pricing, and other skills that anyone who works to a P&L has already mastered.

As a result, law firms and in-house counsel won’t acknowledge that the collision between the legal system’s skyrocketing demands and company budgets (that have more constructive uses than to pay attorneys) is unsustainable. Instead, the legal industry tells business clients that the best they can hope for is to minimize (what they tell us are) the inevitable increases in their legal and regulatory line items.

Casey Flaherty, an insightful lawyer who advises corporate law departments, describes attorneys’ prevailing mindset:

” … The key to value is having smart lawyers. Lawyer time is the primary resource and the primary unit of measure even in law departments ….”

Professor Bill Henderson of the University of Indiana Law School adds: “Because in-house and law firm lawyers are the same people, they have the same go-to move — stand back and let me lawyer.”

As I say, bodies-to-tasks.

Make no mistake. There’s a measure of truth in the legal industry’s outlook. You need those “smart lawyers”. And you need to access their “lawyer time” (though probably not nearly as much of it as they want you to buy).

But those lawyers whose time and legal expertise your business needs lack skills in team leadership, delegation, and cost discipline that the average general manager uses every day.

As a result, your lawyers can be great at analyzing the law for you company, and advocating its interests to courts and agencies. But the legal industry’s self-management is dysfunctional — whether in law firms or in-house departments.

This is why a prominent lawyer-turned-P&L executive recently declared the legal industry “stagnant” in the face of law and regulatory challenges facing business (see my last post):

So here’s how company owners and executives can get the effective legal and regulatory protection they need without the waste and unnecessary liability surprises generated by the legal industry’s inability to manage its own work:  

1. Get clear in their own minds about what the business really needs from lawyers (specialized lawyer skills for analysis and representation) versus what it doesn’t need and can’t get from them (work flow organization, selection and accountability of talent, and compensation).

2. Move work flow organization, selection and accountability of talent, and compensation for their law and regulatory function away from the “stagnant” legal industry practice of just asking lawyers to assign bodies-to-tasks, etc., and

3. Redesign the company’s law and regulatory function for management effectiveness — actual liability prevention, right talent for the particular job (not sending surgeons to do the work of an orderly — or vice versa), and cost control through business process disciplines).

In the next post I describe how to take these three steps.

Professor Wilkins was right to say that the legal industry had entered “the Global Age of More for Less”. But the legal industry needs strong, informed direction from general management to respond to that call.