10 Principles for the Management of Legal Departments

Is the Legal Department you are working for considered a valuable corporate asset? Creating an enduring strategic position for your legal department within your company, following these 10 principles will help you to improve future company performance. Make sure that these principles are applied by the lawyers of the legal department and are communicated well throughout the organisation. If so required, adapt these principles for your own purposes! The long version of these Principles (in German language of course ;-)) you will find in my book:

Brandstetter, Rechtsabteilung & Unternehmenserfolg², 2011.

  1. Strategy: Base and align your legal department’s strategy with your company’s corporate vision and/or mission statement and its strategic goals. Align your short and long term goals with your company’s goals.
    Get to know the strategic needs of your company early to make sure you can support achieving those goals. Following this principle may help you to support a change process in your company or enable to give advice regarding new products or foreign markets. Don’t forget to double-check, whether a US court decision is executable in a foreign country!
  2.  Core competencies: Define your core competencies and adjust them to your organisations’ needs. Know your strengths and weaknesses and build on your strengths. As a general remark, I believe that we lawyers – more than business people or technicians – have the ability to think things through. Occurring problems may be solved by technical, economical or legal means. Some of the most valuable contributions that I have made (and that members of my department have made) have been a result of a joint commercial judgment by using the best technical, economical or legal solution.
  3. Involvement: Make sure that you are involved in important business decisions! It is crucial that you are anchored in the company’s business processes. This makes the legal department recognised as a factor in key decision making.
  4. Risks: Get actively involved in your company’s risk management. Based on your risk assessment, make sure everyone understands the risks involved in contracts, foreign/domestic markets or elsewhere and have a clear understanding of who is responsible to manage, report and control those risks. Voice concerns, if boundaries are overstepped.
  5. Quality: Define the quality of work your company can expect from the legal department. If you are working as a single lawyer, you can’t effort a 4 eye principle. If working in a better staffed department, distinguish tasks which need a premium effort, such as elaborating or relaunching your company’s general terms and conditions or standard agreements. Not every task requires a “Triple A” effort!
    Quality of people: the quality of the legal department is as good as the staff employed, so hire people better than you are. David Ogilvy said “If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.[1] I always followed this principle.
  6. Costs: Care for work cost efficiency. Use smart software solutions that support contract creation, contract management or the management of your company’s rights. “I’m not suggesting that there will be no call for the traditional legal expert. I am saying there will be less call for these individuals, because new ways of satisfying legal demand will evolve and old inefficiencies will be eliminated[2]. If the workload is too big, think outside the box. For example: In a telecom provider I worked for, we saved a lot of time working on customer complaints by providing one lawyer once a week to support our call center.
  7. Communication: Business people often don’t understand why and how a three line e-Mail is converted into a 15 pages long contract and therefore can’t estimate how much effort it takes to get there. It takes me, for example, not more than ten minutes to draft an individual non disclosure, labour or sales agency agreement, based on my Contract Creating Software, but individual contracts may still takes hours or days.
    Communicate the legal department’s strategy, make one person responsible for each department and let people know how much time you expect to spend working in advance. That way other departments know when they expect your input.
  8. Values: Get involved in the discussion of your company’s values. Communicate these values and make sure that you set tone by living them and in consequence are lived by your subordinates.
    Make sure that your company knows what compliance means and complies with relevant rules.
  9. Knowledge management: Establish an active knowledge management for both, your legal department and your organisation and implement a culture of continuous improvement.
  10. Intervene if required: What makes it worthwhile for a company to spend money to maintain internal resources compared to the ready availability of competent outside counsel? What is “the critical success factor” of any legal department compared to any outside counsel. An outside counsel may interfere only if asked and mandated, an inside counsel may intervene any time!

Wouldn’t it be great if your law department were recognized as a valuable corporate asset instead of demeaned as a necessary evil?[3]

[1] http://thinkexist.com

[2] Suskind, The End of Lawyers, 2008, Page 7.

[3] Snider, The Productive Culture Blueprint, Page 1.