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.
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 organization:
“… 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 (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”, (“ACC Skills
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
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 Berra 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 Wooden 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.
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.
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.