Today’s legal functions must become a growth engine for the business and focus on proactively creating value. But the transition isn’t easy. Kearney’s Mike Chapman, Phil Caruso, Seth Anderson and Paul Weichselbaum discuss five keys that can help chief legal officers fulfill this new mandate.
The winds of change are blowing hard across the landscape of traditional legal functions. CEOs and boards increasingly want their legal departments to stop being “The Department of ‘No,’” largely focused on risk mitigation and compliance, and start helping to drive growth and enterprise value. And it all starts with the general counsel.
Executives want more strategic, growth-oriented guidance from their in-house legal teams in the face of transforming industries and sharply shifting consumer expectations. They’re looking to the legal function to help both strategically protect IP and leverage it in new ways to fuel revenue growth. They want legal to mitigate global litigation complexity and shape M&A goals as part of the corporate strategy, guiding the company through a complex and disruptive process. And they expect legal to take a proactive stance in managing ongoing regulatory requirements and company responses to government actions.
This new role for the GC is critical in the face of rapidly changing market dynamics coming into 2023. Covid-19 has accelerated the rate of change, and legal is at the heart of many of the challenges ahead.
These changes affect organizations across all industries, but let’s take media and tech as an example. Their first hazard is the rising tide of litigation in media driven by political volatility, pushback against big tech/media, ongoing M&A, antitrust, regulation and challenges around content ownership and exploitation.
The acceleration of digital media during Covid-19 has also created new legal risks around IP and consumer regulation. Huge growth in areas like sports gambling and live streaming have created enormous growth opportunities — but are rife with legal hazards.
In parallel with the growth of digital media have been rapid shifts in business and distribution models. Today, media companies must have coherent strategies for direct-to-consumer, individual creators, crowdsourcing, live streaming and more. Each of these models offers new and different challenges on deal structures for partnerships, affiliates and other forms of monetization, requiring active legal involvement to maximize value and limit risk.
Lastly, globalization of media remains critical to manage. As new content platforms and direct-to-consumer distribution enable media companies to release content to the world with the press of a button, they must understand and navigate the complexities of a global footprint. Laws, regulations, copyright and IP protections and even freedom of speech itself vary by geography and require a thoughtful strategy to get right.
The fact is, regardless of industry, GCs have tremendous potential to create more strategic, tangible value for increasingly complex, global businesses and address the growing legal complexity faced by the sector. But to do so, they have to make significant changes to how they, and their entire legal and compliance functions, think and operate. And that’s not easy — it takes a lot of orchestration and coordination across the whole company, not to mention new skills, tools and capabilities.
While global events and domestic regulation shifts continue to cause legal disruptions, UK GCs are also being asked to do more with less.
A new breed of legal function
This new type of legal function is built on the foundation of a new and agile operating model based on five core elements:
- Clearly defined organization structure and governance rights that empower legal to act independently and decisively in support of the business. Legal functions today are full of overburdened senior leaders who take an active role in too many matters. A growth-oriented governance approach empowers legal teams to take independent actions deeper into the organization and establishes clear visibility to help get decisions “unstuck.” This is fundamentally about decision rights: determining who can make which calls so senior leaders aren’t overwhelmed and decisions can be made more quickly.
- Streamlined, outcome-driven processes aligned to overall company strategy. Traditional legal function processes are cumbersome, opaque and often involve too many stakeholders to complete basic tasks. We’ve seen examples where legal teams have been asked to do a bespoke, multi-stakeholder review of nearly every contract. Repeatable, transparent processes in a growth-centric operating model remove involvement from all but the most essential experts and leverage tools to automate workflows to drive faster outcomes — e.g., contracts agreed and signed — the business needs.
- Resources and capabilities tailored to the current and future needs of the business. One of the most important operating model design choices a GC must make is identifying the capabilities, expertise and people the company needs (and where) to maximize revenue opportunities while still protecting against risk. A key part of this is fostering a learning mindset in in-house counsel roles and providing opportunities for lateral movement and regular training in other areas of the business (such as finance or sales) so legal has the knowledge of those areas to more effectively support them.
- A culture that infuses a bias toward action and proactivity around the growth agenda. Lawyers are trained to be risk-averse and to ensure everything that’s done is compliant and correct. But being overly cautious and reluctant to act leads to an unproductive legal function. GCs need to infuse a bias toward action and a deep awareness of the sources of risk that could impede the business and the company’s growth. They should enable their teams to make decisions with incomplete information, and be confident they know enough to not have to delay fast-moving and business-critical opportunities.
- The right tools and technology to enable streamlined, efficient workflows. GCs understand the importance of technology. But there’s no single technology that will provide the answer to the challenges of today’s business environment, despite what vendors might claim. That said, the right tools are critical to bringing faster, deeper visibility and smoother workflows to the critical activities of a GC’s organization. The range of options available to GCs today can help them manage legal workflow from matter origination, research and analysis to drafting and contacting to legal actions and monitoring and control.
Going from ‘no’ to ‘grow’
It’s an exciting time for chief legal officers everywhere, as CEOs increasingly look to GCs to take on a more strategic and proactive role in helping to lead the business. Companies face many significant, growing and, in some cases, possibly existential challenges today. Compounding everything is the speed at which business operates, which requires companies to be agile and quick to respond.
Answering the call won’t be easy for many legal functions, which have a long and strong legacy of being deliberate and cautious. But it will be imperative to most companies’ ability to remain competitive and grow. It’s time for legal to shift from “no” to “grow.”
Mike Chapman is a partner and Americas media lead in the Communications, Media and Technology (CMT) practice of Kearney, a global strategy and management consulting firm. Phil Caruso is a principal and corporate counsel, Seth Anderson is a principal and corporate counsel and Paul Weichselbaum is a consultant manager in the CMT practice.