While global events and domestic regulation shifts continue to cause legal disruptions, UK GCs are also being asked to do more with less. Transactions are expected to move faster than ever, and C-suites increasingly require legal departments to demonstrate a more holistic business case for their operations.
With 93% of General Counsel (GC) now joining their company’s executive management teams, these individuals are at the cutting edge of change in the legal industry. But do GCs drive that change? Or are they reacting to pressure from the C-suite?
Executive management is demanding GCs become value creators and embrace digital transformation, in their joint role of trusted business partner and their team’s in-house lawyers. But if digital transformation were a sport, the legal department has thus far been on the bench, and arguably, there’s no better time to start playing the game.
Stepping Outside the Silo
Legal, procurement and commercial contracting departments are under increased pressure from their boards, CEOs and CFOs to operate differently. The GC, as the head of the legal department, is now responsible for driving efficiency and doing more with less, just like any other department head across the business. Gone are the days when legal budgets were left alone while other departments’ budgets were cut.
Additionally, GCs are now being asked to step outside the “fit-for-lawyer-purpose paradigm,” as described by Mark Cohen, where they “rationalize their detachment from business as (being) necessary to maintain (their) professional independence, freedom from economic conflict, and preserve their ethical standards.” Essentially the legal department is under more pressure than ever to stop working in its own silo, and to start working with the rest of the team.
Technology is playing a role in that change. As noted in PwC’s ‘midyear look at deals’ industry insight, the speed at which companies are doing business is accelerating, and the expectation is that the time it takes to close a deal should follow suit. This does seem to be the case, with transactions that previously took a year to complete now expected to close in half the time.
How can this be possible? It’s no coincidence that increased investment in legal technology, such as contract review, analytics and management solutions designed to improve and streamline the lifecycle of the contract, have coincided with an acceleration in business deals. Furthermore, with the emergence of legal operations teams dedicated to ensuring that deals and other processes run smoothly, it paves the way for the GC to think about the bigger picture.
The Shifting UK Regulatory Landscape
It is now the GC’s responsibility to think about the impact of their decisions, counsel and way of working holistically over the long-term, rather than in the short-term world of making legal decisions. GCs need to think about how the decisions they make will potentially impact their company’s growth and shareholder value. They also need to keep abreast of the ever-changing legal landscape to understand how new legislation and regulations will affect their company and the industry they operate in.
In terms of regulatory risk, GCs in the U.K. certainly have their hands full:
- Climate change regulation: At the COP26 summit, the U.K. government passed the Environment Act. Various pieces of new legislation will affect a number of U.K. industries and will enforce widespread change to many business processes, established ways of working and communication between businesses and consumers. U.K. GCs working in many of the affected industries are now responsible for ensuring that supply chains are reviewed and made more sustainable, and best practice procurement models are put in place. Some legal teams are now tasked with establishing best practices and ensuring that both internal and external stakeholders are adhering to sustainability initiatives, via redrawn contracts.
- Brexit: Brexit’s impacts on the regulatory landscape are far from over, but its effect has already been widespread. Britain’s decoupling from the E.U. is likely to impact businesses across multiple sectors, as new rules go into effect that will determine how businesses import and export goods, employ and retain talent, exchange data, or provide services overseas. Depending how Brexit legislation impacts each industry, the role of the GC will be crucial and they will need to work closely with other department heads to understand and update processes or renegotiate contracts.
- UK pensions schemes: Changes to statutory transfer rights for pension scheme members (as set out in the Pensions Scheme Act 2021) came into effect on November 30th 2021. Since there is no transition period, it’s crucial that transfer processes and communications be updated to comply with new legislation. Again, it will be down to GCs to work with department heads, as well as a business’s customers, to ensure that the message and the steps that need to be taken are clear and comply with the law.
Becoming Trusted Business Partners
As noted by John Knox, EY Global Legal Managed Services Leader, “Enabling growth, delivering faster contracting, providing better data and transforming risk management are also key strategic priorities for most business leaders. Law, procurement and commercial contracting departments must ensure operating models are optimized to deliver on these.”
So, simply put, businesses need to develop an optimized operating model that allows the modern GC to walk the tightrope between effective lawyer and business leader without the slightest wobble. So, how should a GC go about optimizing their entire operating model? The answer may be leveraging new technologies designed with exactly these objectives in mind. For example:
- Outbound requests: Using templates, in-house lawyers can generate new contracts based on their own approved versions.
- Inbound requests: At this stage, in-house lawyers will be able to perform triage to determine ownership tasks i.e. Can I sign this? Who needs to review it?
- Negotiations: If needed, in-house lawyers will be able to digitize and streamline negotiations in an efficient manner
- Summarizations: By using contract review solutions, in-house lawyers can send a summary of key terms to help communicate key business insights in an efficient manner.
- E-signatures: Legal documents can be quickly shared and signed by all parties using e-signature tools.
- Compliance: technology can help legal teams flag any deviations from regulatory compliance and keep on top of changing legislation by asking the right questions of their contracts.
- Business clarity: By using question answering technology, not only can in-house legal teams provide answers to business questions, but anyone can find the answers they need regarding their legal documentation without having to rely entirely on the legal teams.
- Performance and reporting: data can be extracted from contracts and exported into reports to help communicate key metrics to the rest of the business. These reports can help make the legal department more data-driven by measuring efficiencies and spend management.
The right technology can help your team to ease cost efficiency pressures, keep abreast of changing regulations and compliance issues, and navigate new markets and securing cross border deals. With technology forming part of a GC’s strategy to optimize their operating model, they can become the vanguards of legal change in the truest sense of the word.