General Electric’s former general counsel, Ben Heineman Jr., famously referred to GCs as lawyer-statesman, arguing that the role is not just about dealing with past problems, it’s about charting a future course, as well. If we can add to his insight: it also means understanding where we are right now.
We are now at moment where our legal departments and our people are acute targets for the deep fiscal cuts mandated across organizations. Legal spend is decreasing just as the risks (from employment policy, vendor obligations, cybersecurity, etc.) are ballooning—unpredictably and exponentially. General counsels must do at least substantially more work with significantly fewer resources.
It feels like we’ve been here before (kind of). In 2008, we felt the heavy weight of economic pressure on the legal department; we saw the headcount freezes and slashes to provider spend. At that point, and during similar periods of economic headwinds since, we’ve all asked: Is this it? Is this finally the tipping point that forces legal to divorce itself from a model that is irretrievably broken?
The answer, so far, has been no. Sure, there has been change and progress. We’ve seen companies, in recent years, leverage an entire spectrum of alternative providers in ways that had seemed impossible prior. We’ve watched GCs rotate toward building bigger in-house departments as an antidote to BigLaw expense.
But, the tipping point? Hardly. Legal still plays by the same fixed staff and firm resource playbook (albeit with different ratios) that leads to a new austerity crisis with every down-cycle.
For years, we’ve waited for legal’s tipping point to arrive. We’re here to say: This is it.
Make no mistake, this is not a celebratory moment. The pandemic that caused the economic disruption is not only still ongoing, it’s growing worse. The scale of the health crisis and the number of lives lost in the end is hard to fathom.
But it is an important change, nonetheless. One that begs the question: Why now—what’s different?
To our GC friends: The answer is…you.
While we’ve been down the recession road before, the journey we’re on now is unprecedented—not only because of the uncertainly of its duration, or the rise in legal risks enveloping organizations—but because of the role of the general counsel.
GCs: Covid-19 has activated you to become your organization’s primary problem solver. You’re making decisions with significant risk implications to the business. You’re making necessary trade-offs between legal obligations and business survival, seeking ways to mitigate risk, to maintain employee privacy/security, and to move the company forward to ensure it can conduct business, even if it’s business unusual.
You have become the organization’s chief resilience officer. And, you are now ready to make the cost-to-risk decisions that will showcase the legal organization as the pinnacle of that resiliency.
Decisions to Make
And just as important as being ready—you are also prepared to be that change agent. You have spent the last dozen years building the pillars that will enable meaningful industry transformation in the midst of this acute crisis, and beyond it. They are:
- Unbundling: It is impossible to recalibrate the legal industry without unbundling legal work. In the pendulum swing from law firms to in-house, legal departments began to acknowledge that most legal processes are divisible. They started segmenting appropriate parts of the legal value chain in order to save money without sacrificing quality. They are ready now to do it not as experiment, but as standard practice. Law firms will retain the bet-the-company work where their billing rates are warranted, along with portions of that work that can’t be sensibly unbundled. The rest of the legal work can be assigned to the providers (better yet, to the talent) best suited to that particular task.
- Flexing: Internal teams are a company’s first wave of legal defense. For too long, law firms have acted as their supporting cavalry. GCs have now experimented enough with alternative legal talent pools to understand that traditional law firms—because of both their expense and their distance from day-day operations—are not optimal for the majority of corporate legal work. The new normal will reward those GCs who turn practice into protocol by building a core legal team supported and supplemented by a layer of agile talent to meet the needs of the organization, in the moment. These GCs are ready to architect a department with always-on access to a team of talent with the variable skillsets and caliber to address emerging and unexpected legal matters. They are ready to build a talent pool that can flex up or down in response to the peaks and valleys of legal work. And, they are ready to eschew legal-only expertise for talent with the business acumen to tackle work, immediately and effectively.
- Right-Resourcing: The legal industry has been allergic to remote lawyering—it’s been part culture, part precedent, part security. Covid has created a bumpy transition to remote working—as unexpected transitions typically are. But, that bumpy transition is yielding to a consensus that this work can be done remotely. As a result, GCs are already ceasing their search for the right-here resource, (the firm in their backyard, the lawyer that can work in their regional department), in favor of the right resource, wherever it is. This is the talent with the right expertise and experience for the matter at hand. Matching legal matter to legal talent is a paradigm shift—and it will be a game changer for cost and for competency.
Ours isn’t an industry that pivots easily. Progress isn’t built on a recognized need for innovation as much as it is the result of a cascade of events. It didn’t just take a downturn to get here. It took two and the most unexpected and catastrophic global heath pandemic to have occurred in our lifetime.
But, we’re here now.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Catherine Kemnitz is the global head of legal for Axiom, the global leader in high-caliber, on-demand legal talent.
David Pierce is Axiom’s global head of commercial. He is focused on advancing the modernization of the legal profession, and shares responsibility for the overall experience of 2,400+ Axiom attorneys.