Ten Rules for Proving Your Value*
*A version of this article first appeared as a chapter in Demonstrating Value in In-House Teams (ARK Group 2014).
“Being
valuable is like being a lady. If you have to tell people you are, you aren’t.”
Margaret Thatcher
In-house counsel must be focused on providing
value in today’s corporate legal environment. Failure to do so is likely to
have adverse consequences for your career. So, I offer some “rules” to help you
prove your value in the corporate setting.
During my career I have had the privilege of
working with in-house counsel around the world. I am always struck by the
commonality of issues and challenges faced by the in-house legal community.
Proving value is one of the most basic and widespread.
Over the years I developed these “rules” from
“takeaways” at numerous conferences and meetings, discussions with corporate
counsel, and many conversations with leaders of the Association of Corporate
Counsel (ACC). Being part of a global
organization like ACC provided an incredible professional benefit – ready
access to both thought leaders and the “wisdom of the crowd”. This article seeks
to distill some of that wisdom.
Understanding value
1. First and foremost, you must always remember that the client
defines value not the lawyer
You must align expectations with the client or
educate the client to modify the expectations, otherwise your efforts to prove
value likely will fall short.
The 3
Geeks and a Law Blog once noted
that there is not one size fits all; the definition of value varies from
organization to organization1:
“… accept ‘what is’… work within the
current value perception of [y]our organization and stop fighting to
demonstrate [y]our value in areas that are not
valued....
[F]ollow the money and you will be
able to tell what the organization values. It may not be what we value or even
where we think we can contribute at the highest level, but if X is what the
organization values, then X is where we must be. This means that there is no
identical road map for everyone. We must each create our own value within each
individual organization based on that organization, and not some preconceived
notion…”.
To be successful, you must have a common,
honest, and realistic understanding of the value drivers in your organization.
While you should be observant and learn from what you see, it also
would be wise to consult with your business colleagues and key stakeholders as
your perception may be slanted. These colleagues may vary depending on your
position in the corporate hierarchy but they could include the CEO, Board, CFO,
business partner, or line manager. You then need to match your department
activities with the value drivers of the organization.
Jeff Carr (General Counsel, FMC Technologies)
a frequent speaker on this topic offers an interesting and succinct summary of
this rule: “What my boss finds interesting, I find fascinating!”
2. Saving money is important, but value is more than just cost savings!
Invariably, any conversation about value
focuses on (or at least includes) spending
and saving money. Sometimes you must spend in order to improve outcomes,
achieve strategic goals, or provide long-term value. We have all heard the
lament about the outrageously high hourly rates charged by outside counsel.
Yet, we all recognize that there are situations (e.g. bet the company
litigation, strategic acquisition, or merger) where a few hours with the right
lawyer at one thousand dollars per hour (or more) provides exceptional value.
Other examples might include money spent for new technology such as a knowledge
management or e-billing systems, as well as for
management training. We all have heard the horror stories about ineffective
spending; like everything else, the key is to spend wisely.
3. Your legal contribution is only part of your value proposition
Many leading in-house counsel play significant
roles on the management team and provide strategic advice and guidance beyond
answers to legal questions. A recent ACC report, “Skills for the 21st Century
General Counsel”,2 (“ACC Skills Rreport”)
concludes that a successful general counsel must be more than just a lawyer.
“Today, and in the future, a general
counsel must offer much more than legal acumen. Our research shows that being a
successful law department leader requires a more expansive notion of the
concept of lawyering. This extended view encompasses not just legal advice, but
also counseling and strategic input.
***
[T]he GC skill set needs to be
multidisciplinary and much broader than simply understanding the law. For
example, general counsel are above all — like the title implies — generalists,
much like other senior executives. As generalists, they touch all areas of the
law: employment, contracts, M&A, litigation, etc. But, successful general
counsel also need to take a broad view of the external environment, analyze
trends, and use that understanding to help the executive team ‘see around the
corners,’ contribute to strategy, and be proactive about addressing potential
legal and regulatory issues. If they wish to achieve their full potential,
general counsel must contribute to the business more broadly than strictly responding
to specific legal needs.”
4. As you move through your in-house career you develop a
progression of skills
First
level: efficient, dependable, and no surprises. Second level: manage budget, manage people, and understanding and
accepting accountability. Third level:
judgment, strategic perspective, and vision. All levels require the ability and
willingness to communicate.
The ability to communicate includes the
ability to listen and to understand what your colleagues actually need.
Participants in the ACC Skills Rreport
describe it this way:
“The first is an ability to listen
well and calibrate responses to the nuances of the situation. Some interviewees
referred to this trait as ‘emotional intelligence.’
Most lawyers are trained to talk most of the time – we are paid in
order to offer our opinion. But the best in-house lawyers aren’t offering
opinions most of the time; they are just listening. They are listening
compassionately, they are listening emphatically, and they have a high degree
of emotional intelligence, which allows them to appreciate the body language
and emotion of the other person.
Others described this trait as being
comfortable in your skin, and being able to engage with people and influence
others to see your point of view. However defined, this trait is very useful to
those seeking to become trusted counselors.
Second, effective GCs, both now and in
the future, must communicate well, or, as one interviewee described it: ‘[T]alk
about complex things simply and put them in context.’ Communicating effectively
also includes the ability to craft and deliver messages appropriate to the
audience. According to one GC, messages must be tailored and not delivered with
a ‘cookie cutter.’”
5. The value proposition for in-house counsel varies
This depends upon: (A) where you are in the corporate
hierarchy (GC, staff attorney, or somewhere in between); and (B) your audience
(e.g. board, CEO, CFO, CLO, supervisor, business client). You may be dealing
with several audiences at any given time. Certainly, if you are a staff
attorney with no supervisory or management responsibilities the expectations
will differ from those of the general counsel.
One general counsel explained it this way: “I
often say that every attorney in the team has the same three jobs: (1)
strategic advisor to their customer; (2) provider of legal services to help
their customer achieve business objectives and maintain the ethical compass;
and (3) build and manage high performance team to achieve (1) and (2). It's
just a question as to for whom: Board and Executive, senior management or
business function management.”
6. To provide value you must understand the business
To understand the business you must understand
how the company makes its money. Remember what Yogi Berra3
once said: “You can observe a lot just by watching.” In-house counsel
frequently assert that they understand the client and its needs better than outside
counsel. I believe that to be true but it will not just happen – you must work
at it. And while you work at this keep rule number 1 in mind.
Using metrics to prove value
7. In a corporation what is important gets measured
What gets measured gets done. As discussed
above, you must understand the end game (or goal) in order to select meaningful
metrics.
Perhaps the most commonly used metric is legal
expenditures or budget management. The ACC Skills report notes that a general
counsel “who consistently fails to accurately predict legal costs will
certainly lose credibility (if not more) within the organization”. It goes on
to conclude that effective budget management has become “table stakes” and a
taken for granted job characteristic. One
general counsel recently told me “meeting the budget targets, and being able to
deliver short-term savings when they are requested (typically of all the
businesses, not just me), is something that is an absolute requirement.”
8. Your legal department goals and metrics should align with and
support the corporate goals
One GC described his approach like this:
“What I do find my management is most
interested in (especially the CEO) is the legal strategy as such. First, does
the legal strategy reflect the company's overall strategy (i.e. is it a real
business strategy, does it support the company's overall goals). And does the
legal strategy drive basic resource allocation decisions – where and how to
invest, hire people, spend our time, etc… I find real benefits from talking
about the business case behind our initiatives/strategy, because then my
business counterparts know I think about helping the company in the same way
they do.”
Another had a similar perspective:
“I’ve
found that the metrics which really interest the C-Suite are those that tie
into the business. For example, a company that spends money on trademarks or
patents would want to show that doing so adds value to the business. In CFO
speak – that the investment (cost to obtain, maintain and defend the IP) yields
a positive net present value (using a metric such as increase in value of the
brand or revenue stream from licensing the technology.”
Other metrics might include legal spend as a
percentage of revenue, number of lawyers per billion dollars of revenue, and
external spending as a percentage of revenue as well as number of patents
filed, average filing timeline, and total patent application costs. One GC of a
global telecom company described his approach as follows:
“I usually have each of my director
reports – litigation, IP, transactional, corporate, etc. – develop the metrics
that they specifically think represent organizational efficiency within their
teams. For example, in the teams supporting business units or sales, it will be
measuring the number of transactions and how long they take to close. With
litigation it may be the number of active cases v. pre-litigation disputes
broken down by type, exposure and length of the case. IP very similar – number
of patents, trademarks and copyrights filed and granted. Obviously there are
additional levels of granularity.”
9. Metrics should measure outcomes not activities
As John Wooden4
once said: “Don’t confuse activity with accomplishment”. Just because you are
busy does not mean you are providing value. The metric that your department
conducted five harassment training sessions and implemented an online
compliance initiative is a start. The fact that harassment claims against the
company declined by 75 per cent in the year following these training sessions
shows the outcome and proves value.
As one general counsel in the health care
industry explained:
“For our contract units, the key
metrics are ‘volumes of contract by type’ and ‘total completion time by type
of contract’ (we measure from the date the contract comes in the door to the
date it is fully executed by both parties and we track that over the years… it
is just amazing how much time is taken out of the process when all aspects
(legal and non-legal) are measured in the completion time… it leads to process
improvements such as e-sign, eliminating steps/people in the process,
templates, negotiating master agreements with third parties that we have a high
volume of contracts, and identification of clauses and business positions that
slow down the process but add no value, e.g. unreasonable indemnification,
choice of law, etc.”
10. Use metrics to drive continuous improvement
Do more than just collect data. To this end
you should collect data that is actionable. Then look for ways to reduce or
improve it. You should understand why you collect data and then use the data or
stop collecting it.
One consultant cited the use of e-billing
systems as a simple example:
“Some departments use e-billing
systems to unlock the wealth of data that is in legal bills enabling them to
become better managers of their work. For example, they may analyze e-billing
data to show exactly who is doing the work, how long it takes, and what it
costs – by individual and by function (partner/assoc./paralegal/staff),
allowing in-house counsel to quickly check to see if firms are handling work at
appropriate levels. The system can also check to make sure that retention
guidelines are not being ignored, e.g. alerting in-house counsel when new
people are cycling on and off projects without approval, or when new rate
changes come through – most of which are missed with paper bills.”
Some departments use “after action” reports
following major activities or litigation. Jeff Carr contends the “single most
important step” you can take towards innovation and improvement is an “after
action, lessons learned” process. After you complete a major project, review,
analyze, and then implement necessary changes. As you do the review, keep the
following in mind:
·
It’s about business — not winning;
·
It’s about prevention — not firefighting;
·
It’s about simplicity — not complexity; and
·
It’s about the business — not interesting
questions.
Conclusion
Much has been written about the unprecedented
changes occurring in the legal profession and the “new normal”. We see new
legal service delivery models, new products and services, as well as innovative
technologies. Many organizations face strong competitive and economic threats
to their existence. It is in this environment that the successful general
counsel will need to exercise leadership, identify how the law department will
provide value to the organization, and put forth meaningful metrics that
clearly show that the department has achieved its goals.
The importance of communication, listening and
understanding the business previously noted remain essential; as one general
counsel with a European Multinational Company advised me:
“Over the years I’ve also tried
various specific customer feedback mechanisms – asking key customers about the
legal team’s services overall and about individual lawyers specifically. From
that, I know the business wants very much to know the lawyers understand the
business context, understand the challenges the business is facing, and can
deliver advice in that context. No ivory tower solutions please.”
The ACC Value Challenge materials provide a
wealth of resources and training opportunities that may help you achieve these
goals. I encourage you to check them out at www.acc.com/valuechallenge/index.cfm.
References
1. See:
www.geeklawblog.com.
2. See:
www.acc.com/legalresources/resource.cfm?show=1356049.
3. A
famous American baseball player known for his mangled quotes, e.g. “It ain’t
over ‘till it’s over”.
4. A
famous American basketball coach known for simple messages directed at how to
be a success in life as well as basketball.
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