The Changing role of the GC
A decade or so ago, the role of General Counsel was a lot simpler – it involved managing the panel law firms (often over a lengthy spot of lunch) and doing a bit of day to day to work.
Now the modern General Counsel is being asked to develop the strategy, manage a business unit and undertake the big projects and transactions. And by the way – do all that with a reduced budget.
An overwhelming 83% of global General Counsel are experiencing a transformation in their roles — according to a recent Acritas’ Sharplegal research report.
“Under intensifying pressure to make less go further”, the report details, “in-house counsel are having to adapt to unprecedented levels of change by expanding their areas of responsibility and extending their skill set.”
In major global organizations with revenues of $1 billion and above, 45% of general counsel say they anticipate their remit to broaden further in the next five years. Higher regulatory and compliance burdens, expanding in-house teams and increasing workload hastened by rapid globalization, are among the reasons cited by the GC’s polled for the report.
Strategy increasingly a focus
As the Acritas’ Sharplegal research report details, 41% of general counsel said they anticipate their role will become more strategic over the next half decade. “The shift from simply providing legal advice to a complex role that encompasses strategy and leadership has been driven by a combination of economic factors and budgetary considerations as well as broader choice and increased competition in legal services provision”, as LegalWeek outlines. The trend toward a more strategic role for the general counsel was also noted by The Center for the Study of the Legal Profession at Georgetown University Law Center and the Association of Corporate Counsel (ACC) in a recent report entitled: “Skills for the 21st Century General Counsel”.
The In-house Business Unit
In many corporations, according to a recent report in LegalWeek, “the GC is leading and managing what is effectively a business within a business, deciding which tasks to retain in-house and which to allocate to external counsel or alternative legal service providers.
As a result, with the new and increasing emphasis on achieving results at a price that represents value-for-money, GC’s are now opting to handle work in-house with growing teams of staff attorneys who don’t bill by the hour, according to a 2014 Wall Street Journal Report cited by BTI Consulting Group Inc.
In 2014 alone, the report details, this represented an estimated $1.1 billion worth of work moving in-house. And the trend is growing: In 2014, about 58% of larger companies sent more legal work to their own law departments — an 8% increase from the previous year.
General Counsel “now place greatest emphasis on achieving results efficiently and effectively at a price that represents value-for-money”, as the Acritas’ Sharplegal research detailed.
“General Counsel are undoubtedly driving legal market change. They are influenced more heavily by Board priorities and achieving shareholder value than they are by their loyalty to a law firm which may, in stronger economic times, have been an automatic choice. Despite the difficulties that wholesale change inevitably brings, a leaner, more efficient client/advisor relationship is emerging. The harsh lesson recently learned by in-house counsel is now upon the law firms who serve them – change and adapt quickly or face the consequences.”
The future favors “forward-thinking, business minded” legal services providers
Importantly, as the report details, these changes are favoring “forward-thinking, business minded” legal services providers who “understand the new legal landscape” and who understand their clients and adapt their services offering to client needs.
This would seemingly place traditional law firm leaders at odds with their clients, who when “asked why they were not doing more to change their business models”, according to a recent Altman Weil survey cited by Stephen Poor, Chairman of Seyfarth Shaw LLP in an article in Bloomberg BNA: “’sixty-three percent [of traditional law firm leaders] said that it was ‘because clients were not asking for change.’”
But General Counsel buying patterns haven’t really shifted yet
Yet, according to an ACLA 2015 Benchmarks Report, less than 20% of respondents have used the services of the primary alternative to the traditional law firm, NewLaw. A whopping 89% of in-house spend still goes to traditional law firms.
However with budgetary pressure not going away – external lawyer spend in Australia has been down 20% since 2012. According to Altman Weil, traditional law firms that are the focus of most of this legal spend are mostly ignoring the needs of their clients.
Information is power
If General Counsel are going to succeed in delivering what their organisations now demand of them, then information is power. They will need to know what is in the market and how to efficiently use those options.
The ACLA Report suggests that the default position of busy General Counsel remains to either do the work themselves or brief it out to their traditional law firms.
But the market has changed rapidly. There are now a range of providers, like AdventBalance, who have listened to what their clients need and established their business models (and structured their fees) accordingly.
A modern “legal panel” should include secondment firms, project managers, regulatory compliance and training providers, legal technology solutions, legal process outsourcers and of course specialist traditional law firms.
Once General Counsel know where to look it is more likely that they will be able to provide their organisations with the legal, strategic and cost-effective solutions that are being demanded.
And maybe, just maybe, find time for a lengthy spot of lunch.