A testing time for lawyers

In the last week, I have met with the General Counsels from three large, international corporations. Each of them is challenged by questions over the future role of the law department and its delivery of business value.

One consistent theme has been that the business increasingly demands facts, not opinions. Another is the pressure to cut costs, increase efficiency and relate legal services to economic value and ‘ease of doing business’.

For most law departments, these demands are challenging. The law is rarely precise – it is based on matters of judgment. Lawyers look for precedent, but they tend to view each case on its merits. They do not think in terms of packages or portfolios or processes. ‘Big data’ and analytics are not familiar concepts. Yet it is precisely these things that are now fundamental to business success and which must therefore be added to legal capabilities.

One area where this becomes especially evident is that of contracting. Historically, lawyers develop contract models; they draft terms and conditions; they review and approve exceptions. Many times, they either support or engage in negotiations. But rarely have they been challenged to explain or justify the business impact of their decisions. It has been enough that they protect the business from harm and get deals done; no one has asked whether those terms or contracts could have been better designed, whether there were opportunities to drive improved bottom-line results.

As IACCM research continues to reveal, the answer to these questions is that contracts do make a real and measurable difference, especially if they are placed in the context of a holistic contracting process. Then, the question becomes who should take ownership of that process, who should gather all the fragmented strands, who should push for appropriate automation, skills, people? Historically, General Counsels have mostly shied away from the challenge such a role represents. Today, that is changing; for many, contracting and contract management are being seen as increasingly relevant to their future as a high-value business function.