To Cut Your Company’s Legal Spending and Prevent Legal Problems, Begin by Defining the Job Right

10 years into my legal career I accepted a corporate client’s offer to run one of its divisions as a general manager. Only by leaving law practice and becoming an executive did I learn how to protect a company from its legal risks.

This protection has two elements:

First Element: Prevent legal problems before they happen — attorneys’ emphasis on fire fighting amounts to bad risk management; and

Second Element: When you fail at the first element, see to it that legal problems are solved with the same high quality and efficiency that you demand in every other corporate function.

Every corporate function other than Legal.

Lawyers, for the most part, don’t see their jobs this way. Prevention of legal problems receive their lip service; but after-the-fact clean-up takes more time (hours billed) — and so it pays better. And one-off, ad hoc efforts on “bespoke” tasks (each contract is “different”) get their serious time and attention — “boring” process disciplines, not as much.

And when legal problems arise, the profession’s business model offers its own, dysfunctional, “management” methods:

  1. Pricing that’s unpredictable — because it’s based on how long the lawyers decide to take doing their work;
  2. Over-staffing by design — more people billing more hours; and
  3. Assignment of inexperienced attorneys alongside those who actually know what they’re doing.

Meanwhile, these “management” methods stymie adoption of accuracy-improving and labor-saving technology: Systems that remove errors automatically and make workflows more efficient reduce the hours for which attorneys can bill the client.

So a company needs P&L people to make sure that the job of protecting the company from legal risks gets done right. And that’s because CEOs, CFOs, and other general managers — in my experience — focus more readily on the company’s business goals.

Lawyers — God bless us — are trained to be technicians rather than business leaders. In law school, and later in law firms and in-house law departments, that’s what we’re rewarded for.

So we’re typically preoccupied with pounding the nails that are suited to our hammers: Legal analysis — and the writing of contracts, representation in court, and similar tasks based on such legal analysis.

And that’s not a criticism of attorneys. It’s acknowledgement of what they’re good at — and what they’re not.

Your company needs lawyers, and it needs their specific, technical skills. In fact, it can’t function without them.

But your business does not benefit from distortions that the legal business model creates in your business by hourly billing, over-staffing, and insertion of recent law graduates alongside fully qualified attorneys.

And it does not benefit from the fact that too many of even those fully qualified attorneys are blinded to business realities by their training and work experience.

The message of this blog, and the logic of my work, boils down to these three points:

  1. Executives should do what they’re good at: Stay focused on the P&L, and manage all corporate functions needed to make that P&L healthy;
  2. Lawyers should do what they’re good at: Legal analysis — and the contract drafting, courtroom representation, and related technical tasks derived from it; and
  3. Executives need to make Legal just as accountable to management disciplines as every other corporate function. Because (most) lawyers — by themselves — won’t.