State of transformation
In the Now phase of dealing with the pandemic, the emphasis for most legal functions has been on enabling business continuity. The legal department had to quickly understand the changes in the legal and regulatory landscape and identify contractual consequences and implications for suppliers, creditors, debtors, customers, insurers and employees.
Some legal functions have already moved through this phase, but remaining uncertainty and the potential for a “second wave” may prolong this stage for others.
The main focus during this initial phase has been employee well-being. The legal function had to ensure its people were safe, constantly updated on what was happening within the business, and able to carry out their jobs remotely with all the necessary tools at their disposal.
Likewise, business functions, including law departments, had to step outside their silos and collaborate with colleagues across the organization to navigate the outbreak while dealing with business as usual.
For law departments, critical areas of focus during this period have not only been workforce matters but reviewing contractual obligations; catching up on any deferred work or impacts caused by remote working, such as subpoena responses; meeting regulatory requirements, which were shifting on a country-by-country basis; and overseeing entity governance and legalization processes. Just helping keep the business running while adapting to a new world was essential.
Moving the law function forward
As countries begin to navigate through the pandemic into the Next phase of managing risk and stability, a range of challenges will have a direct impact to varying degrees on the legal function. Central here will be the need for guidance on whether a pandemic allows for contractual obligations to be voided. Naturally, this may lead to an increase in legal actions arising from insurance disputes or concerning whether parties are excused from performance of their contractual obligations. As a result, the workload for in-house legal teams could increase significantly, and include the need to review and assess large volumes of information.
In addition to legal actions, there may be an increase in activity in the bankruptcy and insolvency space. Arising from this will likely be an increase in the number of legal orders or requests for information that legal departments must handle in a timely manner and in accordance with the rules of the governing jurisdiction.
Also, the need for changes and greater diversity in supply chain relationships may require increased agility in the creation and review of supporting contracts.
Labor and employment issues will continue as legal departments handle ongoing inquiries around quarantine leave and sick pay. Employers may also need to seek more guidance around obligations related to employee safety, return-to-work policies and workforce changes.
However, this may be the chance for progressive law departments to see this as a time for transformation. For those businesses that were already transforming the legal function, the process may have been accelerated as a result of the pandemic. However, the world has changed, so what might have made perfect sense before the pandemic, may not do so now — so, validating pre-COVID-19 transformation plans may be advisable to factor in changes in priorities.
For example, does the legal function’s sourcing model stand up to scrutiny given the volume and diversity of work expected in the wake of the COVID-19 pandemic? Does the mix of in-house legal expertise and the use of external law firms or legal managed service providers need to shift?
Likewise, law departments will have to explore new ways of working. The COVID-19 crisis has demonstrated the need to operate efficiently in a digital environment and for more visibility into work that everyone is doing remotely. Pivotal to that is whether documents, contracts and other data required for the legal department to handle day-to-day matters are easily accessible in a centralized digital location.
Offset against this landscape, however, are the challenges that have always existed for the legal function, not least the fact that they are being challenged to reduce (or at the very least, better predict and contain) costs while somehow managing to transform. The COVID-19 crisis will have only added to that pressure.
Managing this Next phase is a balancing act between dealing with secondary and tertiary COVID-19-related matters, overseeing business-as-usual operations, yet thinking about transformation.
Building from Next into Beyond
To transform while navigating current and ongoing business matters, legal functions will need to make a long-term, staged plan that allows for quick early wins to build buy-in and momentum for later transformation initiatives. This legal department optimization is imperative as economic pressures will accelerate the need to further drive efficiencies and reduce costs.
A natural starting point is for the legal function to effectively assess its current position with regard to:
- Organizational structure and workforce — what is the most effective structure for the organization’s needs and is work directed to the right people based on value, risk and cost?
- Process and operations — has the scope of legal services for the organization been defined and what is the best way to triage or direct the work for completion?
- Technology and data enrichment — is there a technology and data strategy in place that enables the work that people need to do and captures the necessary data?
By conducting a near-term high-level assessment across these areas, a roadmap of where the law department is and where it needs to go can be created — this will help frame the change and communication strategy.
Without this clear vision of what transformation looks like, law departments will struggle to communicate proactively in bringing people along on an intentional journey. Once those people — be they internal or external — are on board, and are willing to either share risk and/or invest in a particular outcome, a far more meaningful partnership can be developed.
How to enhance internal relationships
After assessing and validating the transformation roadmap, the challenge is to ensure that everyone is equally invested in the transformation journey as the business moves through Next into Beyond.
While great strides have been made to integrate legal functions into the business in recent years, more needs to be done. Prior to the pandemic, there had been an increasing trend which saw the CFO, CCO or CIO bringing general counsel to the table in discussions. The COVID-19 pandemic has created further reason to pursue this agenda.
During the pandemic, in-house counsel have been huddling with their counterparts in HR, operations, sales, procurement and finance to solve big problems quickly. Business leaders should move to make this mode of working — which involves constant communication and close collaboration between law departments and the rest of the business — the norm.
This also presents the legal function with a genuine opportunity to demonstrate its true value to the larger business.
Post-COVID-19, business problems are legal problems — for example, challenges around supply chain and procurement are legal matters because there will be a contract underpinning everything. The better the integration and communication between business functions and the ability to view issues from an enterprise-wide perspective, the more robust any business transformation is likely to be.
External partners – ensuring the best fit
The COVID-19 crisis has given legal functions the chance to reassess their operational models from a sourcing perspective to help with the transformation journey.
Other market developments will help facilitate this journey. Legal technology has made significant strides, with venture capital making huge investments since the global financial crisis. There are exciting new tools that can enable more efficient ways of working, such as artificial intelligence that can automate processes such as document review and remediation, as well as assist in legal research.
The array of providers offering services has also expanded and now ranges from providers focused on a discrete set of services to large global providers offering more comprehensive support including traditional legal advisory services, legal operations consulting and legal managed services.
The range and expertise of external providers has arguably never been broader, providing the legal function with multiple sourcing options. As such, enterprise-wide requirements as well as specific law requirements should help drive the decision-making process.
Continue prioritizing the workforce
In times of transformation — especially during or post-pandemic — communication is critical. For law departments undertaking transformation, people can only be brought along if they understand what is happening and why.
COVID-19 meant that, with many people working from home, businesses had to be in contact far more often. This could now be the time to build and strengthen internal trust. Once a company has set this standard, it’s vital that it maintains it. And in the post-COVID-19 world, making sure employees feel included will have numerous potential ongoing, long-term benefits.
When it comes to attracting and retaining talent, companies that have a thoughtful regular approach to their communications and how they engage with their people will prevail.
The more involved employees feel — including as part of transformation — the more they will give back, the more invested they will be about driving the business forward. As law leaders reshape the legal function, potentially adding in new roles and capabilities, it’s important that people are listened to and aren’t excluded from those discussions.
Transforming in a time beyond the COVID-19 crisis
While the COVID-19 crisis created disruption to global business in a way that had never been seen before, this could also be the time for law departments to completely reimagine how they operate. The challenge lies in turning that theory into practice, it just needs to be handled with the right balance of strategic focus and care.
