The increasing importance of in-house legal teams in supporting business transformation

The onset of the COVID-19 pandemic in early 2020 saw a dramatic acceleration of the role of in-house legal teams acting quickly and decisively to manage business risk and support their organisations' transformations.  But with the world now emerging from the initial stages of the crisis, what’s next for the legal department? Is the pandemic spurring permanent shifts in Legal's roles and responsibilities? How can team leaders help their organisations succeed in a business climate that is more unpredictable than ever?

In conjunction with the FT/RSG Intelligent Business Forum, Ashurst Advance recently brought together general counsel and senior business executives from Australia, the UK and the US to seek answers to these questions.  Leaders from industries including automotive, finance, technology, logistics and transport took part in a virtual roundtable where they discussed the challenges of building legal teams equipped for the future.  The themes that emerged from the discussion form the basis of this white paper.

Agility

Within every sector represented at the roundtable – from the more mature industries to those emerging in the technology sphere – participants identified agility, both in their underlying business as well as within their legal function, as key to maximising their chances of thriving and in some cases surviving during this period of unprecedented uncertainty and change.

Organisations are seeking to aid recovery efforts by identifying and prioritising new growth areas, or creating an agile and flexible workforce by transitioning underutilised staff to areas of need, often having to diversify and scale up at speed.

"COVID has been devastating for some parts of our business, but other areas are seeing tremendous growth," said one general counsel.  "So my team members are working on diversification projects as well as recovery projects, and rebalancing priorities to support both areas has become a serious challenge."

Embracing a broader role

The participants agreed that the legal department’s role has broadened, and its profile has been raised, since the pandemic began.  Businesses are relying on their legal teams’ insight and counsel as a valuable part of managing significant shifts in business demand and priorities and now, more than ever, general counsels need agile, up-skilled, multidisciplinary and empowered legal teams.

Team members’ advice and support is being sought on corporate strategy, for example.  "Lawyers are often brought in to be the voice of reason and common sense, and this time of COVID has been no exception," one participant said.  "My team has been drawn into multiple workstreams for input on issues that aren’t necessarily legal decisions, such as how to help our organisation position itself as a force for the common good during the crisis." This need for a business to "have a good COVID", and the role that Legal can help play in that, was a common theme.

At the same time, crisis management work continues.  "Our workload has skyrocketed!" said one lawyer.  "From dealing with supply chains and the performance of commercial contractual obligations to managing the needs of our retail network, everything we’ve been working on since the outbreak began has been business-critical.  And those issues are still major priorities."

Emerging from crisis management 

"You can’t work in crisis mode forever," said one general counsel, a sentiment with which many participants agreed.  Negative impacts of the pandemic on the global economy are expected to extend far into 2021 and beyond.  "You have to start redesigning and re-evaluating your processes and priorities to meet the needs of the new situation," they added, agreeing that identifying, designing and implementing transformation initiatives is especially important as challenging conditions continue.

But with no blueprint for what their departments are facing, many leaders said there was an urgent need to redefine strategic priorities to keep up.  "We’re having to make sure that the whole business is aligned on the most important objectives that our team is trying to hit, and then for us to be really robust on which pieces of work can or can’t be done," one lawyer said.

Remembering the human impact

Participants acknowledged that managing this broader portfolio of expertise – combined with a heightened expectation of the speed at which the legal team should deliver support – brings many challenges.

"As a manager, trying to lead an already lean team to support our businesses as they diversify or adjust their focus, at the same time as dealing with new regulatory pressures and other crisis management issues – it’s a perfect storm," a participant said.

The discussion picked up how important, yet how difficult, it is to lead change with a largely remote workforce, particularly taking into account the human aspects of change, or behavioural change, which is much harder to read and adapt to remotely.  The importance of having good managers was emphasised and in particular the need to make a greater effort to build and retain a feeling of "community".  One general counsel noted that collaboration had been stronger whilst the teams were working from home, providing a greater opportunity to achieve strategic change if that power could be harnessed.

Another participant from a regulated institution noted the increased risk from managing a dispersed workforce leading to greater regulatory pressure.

There was a particular emphasis on wellbeing, empathy and caring for team members’ needs, especially during an extended period of change and uncertainty.  "We went through a restructuring exercise where we reduced the workforce by 25 per cent," a participant revealed.  "And we had to do it all remotely, which was pretty challenging, not least because it took out the human touch.  So now, as well as everything else, it’s vital to deliver that employee morale element and give people reassurance, wherever they’re sitting on the change curve."

Executing transformation initiatives

It could be said that in times of deep change, it’s the best time to embrace those transformation initiatives which have been identified as game-changing.  Teams that have already embraced technology and data have been better able to transition from crisis management towards making meaningful improvements.  Other participants reported that, in the current climate, it was harder to get investment and executive buy-in for transformation projects in their organisations and some initiatives had been delayed by 8 months.

A leader from one of the mature industries had a positive story: "I have no roadblocks internally right now to getting approval for testing solutions that could help us better manage risk and bring about more efficiencies.  I know that we lawyers are never allowed to say these words but I’m finding that we’re now being allowed to fail, in the sense of experimenting, testing and seeing what works."

Another example from an emerging organisation: "We’re a challenger organisation in our sector, built to be fast and nimble, so we’ve always been highly digitally enabled," said the leader.  "For example, we’ve long had flexible working practices and the technology in place to enable it, and we’re really seeing that pay off.  We’d just started to go back into the office when we were locked down again, virtually overnight.  But we were able to pick up our laptops and go back to collaborating from home, keeping that strong connection to our teams and our customers intact." 

Adopting new technology

It was commonly agreed that there had been a sharp increase in the adoption or use of technology to facilitate remote working.  However, on the whole this largely centred around the basics of document or matter management systems, e-signature and teamworking applications, rather than anything game-changing.  One participant noted a significant increase in interest in blockchain applications, even though any material impact would be further down the line.

Driving a transformation agenda

Participants agreed that although there has never been a better time for transformation, with teams now needing to offer guidance to their organisations in so many new areas, they are also facing an unusually high number of barriers.   

They identified three steps leaders can take now to start dismantling these barriers and maximise success within a transformation agenda, centred around business alignment and a ruthless focus on a smaller number of priorities:

1. Double down on Legal’s integration and alignment with the wider business. Ensure the legal team is embedded when it comes to setting strategic priorities and addressing challenges.
2. Having aligned with the business, clearly define the scope of your department’s role and key priorities. Then communicate these across the business to ensure Legal can avoid being pulled in many different directions.
3. Be very specific and clear on the business outcomes you want to achieve with a transformation agenda. Pick one or two things and champion those, grabbing the opportunity now to drive positive change and efficiencies and ensuring that you can deliver upon them.

One general counsel put it this way: "Innovation and change isn’t easy, but it’s up to us to facilitate it now as the ‘new normal’ takes shape, so the business is better set up to succeed."