Deloitte Legal Management Consulting
A changing world requires a new approach to law By Deloitte Legal Content
The Deloitte Approach—Legal Management Consulting 01 Measuring Value 03 Strategy 04 Legal Risk Management 05 Operating Models 07 Legal Process 10 Sourcing Strategy 11 Selection 14 Technology 15 Data 18 Roles 19 Predicting the Future 21 Managing Change 23 Supporting Research 24 Foreword
Companies need their legal teams to keep pace with the commercial needs of the business—while at the same time, legal departments are increasingly being asked to do more with the same or fewer resources. Today’s corporate General Counsel (GC) faces multiple challenges: a heightened regulatory environment, mass globalisation of business, and acceleration of technology advancements. This is resulting in increased complexity and demand from the business which is creating an unsustainable workload for existing in-house legal departments. The current business landscape creates a compelling reason for legal departments to rethink their operating model, achieve greater efficiencies and increase the value they deliver back to the business.
This paper is intended to present GCs with a variety of opportunities for transforming their operating model to a desired state.
Piet Hein Meeter The Deloitte Approach—Legal Management Consulting
The Deloitte Approach— Legal Management Consulting
The legal world is transforming and Considering an in-house lawyer’s need for Our research suggests that in-house Deloitte Legal is developing the tools rigour and process in legal functions, we functions are under unprecedented to help legal businesses during this decided to draw on our experience in tax pressures, both internal and external, to transformative time. and apply the TMC methodology to law demonstrate value, manage risk, contain practices. When we suggested this idea costs, embrace new ways of working, Deloitte’s work on Legal Management to lawyers, we uncovered a considerable introduce technology, operate globally, and Consulting (LMC) was inspired by two overlap and synergy. When we raised the align with their organisations. It is a time of quite different factors: possibility of LMC during research and transformation. It is time to transform. discussions with in-house counsel, the 1. The first was our study of the global feedback was encouraging. legal market. We interviewed General Counsel (“GCs”) and conducted formal LMC is a new approach and a new research with GCs, CEOs, CFOs, and discipline, developed for lawyers by lawyers other senior executives and identified and other experts. It builds on mainstream a growing need for a much more management consultancy, risk advisory disciplined and systematic approach services, as well as tax management to the management of in-house legal consulting. LMC is a collection of models, departments. frameworks, and systems to help in-house lawyers run their departments more 2. The second factor was our work efficiently and comprehensively meet their during the past decade in the field business needs. It is an attempt to capture of tax management consulting. countless person-hours of management Deloitte’s Tax Management Consulting and consulting experience into a set of (TMC) is now a global, multidisciplinary services and tools. Similar to TMC, LMC service that assists tax departments focuses on operating models, technology, and tax directors with strategies, and work-sourcing, and cost management. advises them on operating models and technology.
1 The Deloitte Approach—Legal Management Consulting
External Drivers Internal Drivers
Rising cost of Do more with less— legal services without sacrificing quality
Becoming a strategic Globalisation business partner
Corporate Legal Department New Exponential Imperatives organisational technologies risks and exposure
Increased Changing talent regulations models and needs
Mergers and Multiple locations Acquisitions and geographies
LMC is designed to help GCs manage and transform their departments in a controlled and methodical manner, to move from fire-fighting and piecemeal changes to a more structured transition.
This paper provides an overview of the issues that LMC addresses, of the solutions on which we are working, and of our thinking so far as we explore new territory in the legal services arena. The plan is for Deloitte to develop LMC together with our clients.
2 The Deloitte Approach—Legal Management Consulting
Measuring Value
One of the great unanswered questions in through the following three potential key the world of law is how practitioners can performance indicators: Summary demonstrate value to their clients. In tax, 1. To compare the legal costs (internal and there is less of a challenge because tax external) of similar businesses ••Deloitte’s LMC team is experts can quantify savings that flow from committed to help General a given tax arrangement and point to the 2. The costs of work done in law firms as Counsel demonstrate and effective tax rate as a definitive indicator of against in-house departments measure the value they bring performance. 3. The costs of work undertaken to their companies traditionally by lawyers in contrast with Unlike tax experts, measuring the alternative providers. (This can include ••Deloitte’s LMC specialists aim contribution of lawyers is less obvious. new labour models or technology- to put in place practical tools How does one place a numerical value on based solutions) to help in-house lawyers build a disaster averted, a dispute preempted greater value into their services or a breach avoided? Such comparisons are undertaken informally today on the basis of limited ••In-house lawyers should give While we do not have all the answers, it data. Our aim is to provide better tools for thought to and expressly is our intention in the coming years for this analysis and access to superior data articulate the unique value our LMC specialists to contribute to the sets—using machine learning techniques that they offer ongoing debate and develop practical tools rather than informal benchmarking. to help in-house lawyers build greater, demonstrable value into their services. Our research also indicates that listening Our tax and consulting experience will more intently to the end-users of a legal Users also want to be able to monitor offer some guidelines and we are already service helps to identify the benefits they progress on their legal work. New engaged with our legal risk specialists, expect. The recipients of legal services techniques can help here—from who have long been concerned with the should be asked what tangible value they global reporting and dashboarding, to business benefits of avoiding rather than expect and the legal business’ contribution standardisation and process mapping— resolving problems. Recent work with should be measured against those each enabling greater control, increased major legal departments confirms that expectations, as well as more intangible insight, and improved levels of compliance. their tools and techniques can be adapted ideals of legal precision. A rough and for other law practices. We also plan for informal but practical guidance delivered In-house lawyers should also consider and our economists to create productivity early is often preferred to exhaustive articulate their value, such as their unique measurements for legal businesses. legal analysis submitted at the tail end experience, insight, and expertise. of a project. Users of legal services often A number of important distinctions can seek qualitative value (reassurance, peace already be identified. While we currently of mind, and confidence) rather than do not have the models to quantify the quantifiable value (savings and revenue). absolute value of lawyers’ contribution, it is possible to assess relative contribution
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Strategy
We have learned that many external and The purpose of strategic thinking is to in-house lawyers are wary of the subject of set direction and priorities for an in- Summary strategy because it often sounds like jargon house department and align them with broader department strategies within and irrelevant to legal advice. ••The purpose of strategic the organisation. It is also essential to put thinking is to set direction It is true that strategy is sometimes in place realistic plans for the changes and priorities for the in-house dressed up in complex terminology, but required. These plans should be based this need not be the case. Our experience partly on the values and culture of the department that align with from the Deloitte Tax Management department, although they may not have the broader strategy of the Consulting practice has shown us that been expressly articulated in the past. In organisation large part, the strategic direction should there is a practical approach to strategic ••Our emphasis in strategy planning which has greatly enhanced the also be driven by a robust analysis of the work is generally on the work of tax directors and tax departments. legal needs of the business and, vitally, next three to five years with We can use similar techniques in law. the main legal risks that it faces. These risks may shift, but once the direction a focus not on short-term The contribution of LMC is not to is set, we will work together to select a fire-fighting but on long-term come to our clients and make specific preferred operating model, and establish health management responsibilities. recommendations. Strategic thinking ••There are 10 elements of should not be outsourced to us or to any strategy to consider external consultants. Instead, the role There are 10 elements of strategy: of LMC is to provide a tried and tested direction, priorities, alignment, planning, framework for strategy work, along with values, culture, needs, risks, operating guidance from our specialists, so that model, and responsibilities. For each of in-house legal departments can plan these elements, LMC will provide tools future position strategies in a clear and and techniques to help in-house lawyers structured manner. make choices and plan for the future and formulate a high-level strategic view. Our timeframe for strategy work is generally within the next three to five years, Finally, we believe that strategy must be led with a focus not on short-term fire-fighting directly by the leaders of an organisation. but on long-term business health. We In an in-house environment, the GC or COO can help create and maintain a broad and (with the express support of the GC) must sustainable, as well as relevant and valued, own the process. legal capability within a given business.
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Legal Risk Management
During our research and conversations This is where LMC comes in. We applied we have found that most senior, in-house systems and methods successfully Summary counsel believe that they are in the risk implemented in both our tax and risk management business. This correlates practices, and now have a framework for ••Legal and compliance to some extent with our work in the the identification, assessment, monitoring, functions can benefit from a tax business, where directors are often and reporting of legal risks. While we do systematic approach to risk preoccupied with tax risk. But because of not believe that risk management can be the more complex regulatory environment, reduced to a science, a more systematic management rapid globalisation, and the diversity of approach, proven in other fields of ••New skills, roles and legal regimes across the world, we see that business, can be mapped onto legal and responsibilities will be needed legal departments face a wider range of compliance functions. as legal and compliance risks. departments move from New skills, roles and responsibilities reactive risk management to The primary, formidable risks handled by are required as legal and compliance in-house departments today involve legal departments move from reactive risk avoidance compliance and reputation and seldom management of risk to risk avoidance. ••New reporting lines will need originate in the legal function. GCs worry People skilled in preventative and to be created, and where that most risks arise from activities and precautionary services are needed to fill appropriate, consolidated on behaviours across businesses without GC these roles. a global basis control and without management visibility. They are concerned that even their most New reporting lines and communication upright employees may unconsciously channels are required and will be breach a local regulation or set up some consolidated globally. Operating risks anti- competitive process that increases should be managed, with legal and exposure for the business. commercial risk, as well as legal and compliance risk, via the integration of We have been struck in our discussions systems and processes. that, although risk is high on the list of priorities and concerns of most GCs, there are very few tools for the systematic and effective management of legal risk.
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Legal Risk Management
What is the definition of Legal Risk?
What What interaction organisational is there with structure and skills regulators are needed to around Legal Risk ensure appropriate Management? management of Legal Risk?
How can Who in the technology organisation enable better is primarily Legal Risk accountable Management? for Legal Risk Management?
What does good Legal Risk monitoring and reporting look like?
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Operating Models
Our work in tax management consulting There is no optimal operating model for suggests that in-house lawyers would in-house legal departments. However, Summary benefit from thinking about the future standard models are beginning to emerge, whether organisations in-source or shape of their departments in terms of ••In-house lawyers would what we call ‘legal operating models’. These outsource, centralise or decentralise, on- benefit from thinking about models specify how legal operations are shore or off-shore, or whether or not they shaping their department organised to deliver legal services in their integrate legal and compliance. We believe respective businesses. As depicted in the it is now possible to identify some best in terms of ‘legal operating adjacent diagram, “The Legal Management practices in relation to operating modes, models’ Consulting Operating Model,” this operating taking into account the broader needs of ••A legal operating model model includes the strategic direction an organisation. consists of four key of the department, the governance of components: the function, the tasks and services Our research found that many GCs that are required, and the enablers or and legal COOs are anticipating a - The strategic direction of infrastructure that support these activities. transformation in the operation of their department departments during the next few years. - The governance of the Of course, some kind of operating model New service delivery models, often based function is always in place in a legal department, on technology, are gaining approval and are whether or not in-house lawyers are as likely to challenge in-house lawyers’ work - The tasks and services cognisant of them, but our experience as much as external law firms’. In-house to be delivered suggests that an operating model helps lawyers are incrementally beginning their - The enablers or articulate an explicit direction in any ‘transformation journey’, representing infrastructure that support business. Models bring clarity to those a move from one operating model to these activities who work within the business and to another. their clients. They provide a systematic benchmarking to compare against similar businesses. An operating model helps assess operational performance (efficiency, effectiveness, and customer satisfaction), and it is a useful tool when planning any structural reorganisation.
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The Legal Management Consulting Operating Model
Strategy Strategic Direction Strategy based on needs of key stakeholders, Governance clearly communicated goals, roles and Roles and Responsibilities responsibilities, governance standards
Legal Services and Tasks Geographical location Business unit location
Business-as-usual legal tasks e.g.: Legal Services and Tasks
Deals Disputes Advisory Compliance Defined legal tasks and legal projects central to the legal department
Company and industry Strategic/one-off project May differ based on specific industry or specific tasks e.g.: legal work e.g.: company requirements Company- Industry- Corporate M&A specific specific Restructuring
People/Sourcing Process Technology Enablers Infrastructure which supports and monitors Matter Management Legal Risk controls across all legal activities, making the Management Information Management legal department efficient and effective
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Legal Process
Law schools generally train lawyers to overcome them, sometimes by making focus on the unique circumstances of each modest changes to the process maps, Summary clients’ case, which includes a set of specific and often by completely redesigning legal processes. For in-house legal departments needs. Clients of law firms are increasingly ••Legal process analysis involves that are looking for increased efficiency looking for standardisation of processes thinking about and managing where lawyers deal with tasks that are and quality, legal process analysts may well legal work in a process- broadly similar to work undertaken in the be the first port of call. Methodically and oriented way past. Indeed, lawyers are often selected systematically, they assess and improve the precisely because of their past experience, way in which work is conducted. ••Legal process analysts will with an expectation that this experience be key people in any LMC leads to greater efficiency. The same mind-set is needed when legal practice work is unbundled and broken down A related discipline has emerged over the into component parts before the work is ••Deloitte’s LMC team will past few years: legal process analysis. This allocated to the most efficient source(s) include process analysts and involves thinking about legal work and (see Sourcing Strategy). The first step in project managers managing legal work in a process-oriented unbundling is an analysis of the current way. This parallels the approach we have tasks and flows. taken in tax over the past decade. Another benefit of process analysis is Legal process analysts will be key people that it provides a basis for legal project in any LMC practice. They specialise in management. Analysis of legal work scrutinising the way that legal work is involves articulating milestones and time done and mapping the tasks involved as scales, which can be monitored and well as the flow of the work. They look measured. for bottlenecks and inefficiencies and
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Sourcing Strategy
Until 2010, in-house lawyers faced a outsourcers. Technology-based solutions relatively simple choice when deciding take this one step further. Certain routine Summary how to resource a deal or a dispute. They work, such as document review and either conducted the work themselves or repetitive drafting, can already be done ••There are two broad instructed an external law firm, sometimes better and at lower cost by automated categories of alternative opting for a mix of both. The balance systems. and blend of internal and external work sourcing: human labour and transformed, and it was fashionable for One great challenge now for in-house technology companies to have large in-house legal lawyers is to achieve the best balance of ••New labour models have departments with a small amount of work internal and external resources, along emerged in law including: done by external firms. Next there was a with a balance of people and machines. outsourcing, off-shoring, sub- shift towards much leaner internal teams, This challenge applies both to individual contracting, near-shoring, and and currently we seem to be going through projects as well as to their departments. using paralegals a period of increasing in-house functions. It For particular projects, there is an is not clear if these patterns are cyclical. additional possibility: that of unbundling ••Technology-based solutions work, so a specific piece of work might be are already available for A more significant change in the world of sourced in a variety of ways. When this routine, repetitive work in-house counsel, in our view, is the move happens, solid project management is away from the two-provider set up. There called for, to ensure all strands are brought ••Unbundling work is another are now many options beyond in-sourcing together effectively. way to outsource parts of a and law firms. There are two broad project categories of alternative sourcing, with one For many years now, we have advised tax based on human labour and the other on departments on the various ways they technology. might resource their departments and source their projects, from single-source Various new labour models have emerged supply through to much more exotic in law: outsourcing, off-shoring, sub- combinations of providers. We have contracting, near-shoring, paralegal work, developed techniques for identifying the and many others. The common idea is best options for particular clients and we to have some of the work that is routine are adapting these for use with in-house and repetitive delivered at a significantly lawyers to assist them on settling on their lower cost, achieved based on lower costs sourcing strategy. of personnel, property and operations. Sometimes, these lower-cost resources are still part of the business; on other occasions, the work is passed along to third party providers, such as legal process
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Legal Services—Potential for Alternative Sourcing
Contracts & Transactions Corporate Governance
Contract Contract Due M&A / Joint Annual Subsidiary Global Review Diligence Venture Meeting Management Policy
Corporate Negotiation Contract Contract Corporate Board Policy & Support Drafting Management SEC Matters Reporting Procedure
Intellectual Property Litigation
Patent / Patent IP Portfolio Discovery E-Discovery Copyright Drafting & Management Services Compliance Research Review
Cease & Drafting Database Infringement Legal Desist Pleadings & Creation & Analysis Opinions Notices Briefs Maintenance
Regulatory & Compliance Support Services
Environment Statutory / General Regulatory Document Health & Case Law Business Support Management Safety Research Support
Material Paralegal & Regulatory Regulatory Legal Billing Immigration Regulatory Secretarial Inquiries Reporting Services Support Matters Services
Potential for alternative sourcing: Low Medium High
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Selection
The selection options facing General time-consuming. This is a challenge that Counsel are more complex than in the past. Deloitte LMC is committed to addressing. Summary Historically, there were two main decisions Our early conclusion is that panels can be useful, but are often used when for any given matter: can we do it ourselves ••Deloitte LMC is committed and, if not, which firm should we hire? As less formal methods would suffice. to addressing the time- we say in the previous section, there is Another preliminary view is that panel consuming process of panel now a bewildering array of possibilities: law methodology could be greatly improved. firms, alternative providers, technologies, selection and often a blend of these. Closely related issues here are Alternative ••Often panels are used when Fee Arrangements (AFAs) and spend less formal options would Over the years, we have advised management. We have encountered a suffice innumerable businesses on their sourcing wide variety of approaches to charging and selection strategies—on the best set but are not convinced that these billing ••There is room for up for everyday work and on the particular models deliver the scale of savings improvement in the overall needs of special projects. We are applying that GCs tell us they need. Many AFAs panel methodology the lessons learned in strategy consulting are simply variations on hourly billing as well as in tax consulting by developing proposals and do not, in our view, offer ••Deloitte LMC is prepared selection methods specifically for legal a sufficiently different proposition. The to tackle the technical and departments. Although the providers are savings that in-house departments cultural challenges that very different, our basic tried and tested require are more likely to be based on arise from Alternative Fee methods for vendor selection and RFP alternative methods of delivering service Arrangements (AFAs) and management seem to work well when (new labour models and technology) spend management applied to the range of legal services rather than new pricing models. suppliers now available to the in-house community. We recognise and welcome On the question of spend management, the involvement of expert procurement our research suggests that the use specialists, and when appropriate, online of e-billing systems delivers tangible auctions and price comparisons. savings. Much more popular in the US than the UK, these systems are Our conversations, both with law firms rarely easy to introduce. In particular, and with General Counsel, suggest that technology departments, especially in many have reservations about the use of financial institutions, are often resistant panels. Some express doubt about the to integrating the technology into their use of panels under any circumstances. systems. Deloitte LMC is equipped Others are comfortable with the concept of to tackle the technical and cultural a panel, but believe that the panel selection challenges here. process is generally too cumbersome and
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Technology
For several reasons, lawyers are seldom The business impact of legal technology considered advanced technology users. can be profound through: Summary In-house lawyers suffer from several •• cutting the costs of routine work (for common constraints. The technology example, document review in litigation ••Technology is playing an departments of most businesses have and due diligence exercises, as well as increasingly important role in limited experience with legal technology, corporate compliance tasks), the delivery of legal services nor are they interested in such technology. Only a small number of legal •• increasing quality and consistency ••The legal environment is departments have their own technology (for example, when using document shifting from human labour to experts. Moreover, few publications or automation), technology use, providing an organisations help GCs through the maze •• managing the department’s workload opportunity for LMC clients to of options. In the end, most muddle (e-billing systems), become the leading users of through using generic applications used technology in their businesses, alongside some •• sharing insight and know-how (social homegrown systems and various tools networks), ••Deloitte LMC aims to provided by law firms. •• managing contracts efficiently (contract introduce legal technology lifecycle management, document systems that make a It used to be like this in tax departments. In automation and blockchain), and difference response, our tax management consultants set about introducing some discipline into •• implementing risk management (AI- tax technology. Our LMC team is doing based document analysis). the same for legal departments. We are We are sensitive to the cultural challenges creating a map of all relevant categories of Many of these technologies are well- of change. The successful introduction systems, a database of available packages, established. We are also adapting some of of most systems requires adaptation to and a framework to help in-house lawyers our more popular tax technologies for legal working practice. Indeed, unless lawyers assess and specify their requirements use—such as our workflow and deadline are prepared to work differently, the and decide whether to build or to buy. tracking systems and our global risk full benefits of a new system are often They can also select the most appropriate management tools. not realised. Our experience with busy suppliers, ensure timely and effective professionals tells us not to rush the implementation, and initiate targeted There are two complementary ways of changes in one big bang—the measured training. Many lawyers find technology assessing what technologies are best incremental introduction of new systems rather bewildering, but we intend to suited. One is to start with the business is often more productive than attempting introduce systems that make a difference, imperative, such as cutting costs and focus “big bangs”. through training and process planning. on technologies that can meet that need. The other is to look at the work of the department and consider the technological impact for each main category—deals, disputes, advisories, compliance, and operations.
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Legal Tech for the Legal Department
Document E-discovery Emerging Tech: Automation Predictive Case Analytics Knowledge Management Tools Emerging Tech Authenticity Tools Knowledge Management Tools Blockchain & Matter/Case/Spend Smart Contracts Management
Emerging Tech Emerging Tech Authenticity Litigation KM Tools Legal Analytics Robotic Process Tools Labour Law Automation
Contract Lifecycle Matter/Case/Spend Management Management KM Tools
M&A Contracts Emerging Tech & Information Document Extraction Legal Analytics Automation transactions Legal Tech KM Tools Entity Management
Document Automation Compliance Emerging Tech & Regulatory Support Robotic Process Services Automation Compliance Solutions Speech Recognition
Emerging Tech Robotic Process Matter/Case/Spend Automation Sourcing IP & Property Management & Admin KM Tools
Emerging Tech IP & Property Matter/Case/Spend Emerging Tech Legal Analytics Tooling Management Robotic Process Automation
What seems certain is that technology will play an increasingly important role in the delivery of legal services. Many of the current changes in the legal world involve using less costly forms of human labour. In the near future, machines will take on more and more legal tasks, initially the routine work and, in due course, some more complex tasks. Law firms are increasingly recognising this shift, as are the many legal tech startups. It is time for clients to become the leading users.
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Data
Deloitte formerly stressed the Another illustration are the systems that importance of three building blocks have recently been developed to undertake Summary for all organisations—people, process similar document analysis but for due diligence exercises. These applications of and technology. We said that the most ••A new range of techniques successful businesses are those with a technology are becoming mainstream. It have been developed which blend of the best of each of these building remains for in-house lawyers to be more help us derive value from the blocks. We now add a fourth dimension: confident about asking their external data. In the last few years, technologists advisers to use them. Substantial cost data we have in our systems and businesses have realised the value of savings will follow. ••Stored data can be of value their data and related fields of expertise– in law for benchmarking, for ‘Big Data’, predictive analytics, data science Perhaps the greatest potential for the knowledge management, and machine learning. There are now latest data techniques in law is in the area and for applying analytics techniques which help us sort through and of risk management. We envisage using can help with proactive risk derive value from the data we have in our data science techniques across huge systems. bodies of data from many organisations management to identify the markers and signals of legal ••Deloitte’s LMC team will In law, it has been recognised for a long and compliance risks. Some of this data will deploy data specialists to time that stored data could be of value, belong to our clients, some will be public work with in-house legal for example, in both benchmarking and data, and some will be our own data. The departments knowledge management. The new wave results of this data analysis will help us of systems has greater potential for the deploy systems to provide and, in practice of law. These systems do not real-time, early warnings of impending just operate on structured data (like legal problems. spreadsheets and e-billing systems). Instead, they are able to make sense of Our experience in tax (which, admittedly, unstructured data, such as emails and relates largely to numerical data) along with word-processed documents. our risk work, shows us that specialists are needed for sophisticated data analytics. One case study here is the field of Over the past few years, Deloitte has been ‘technology-assisted review’ (sometimes recruiting data scientists. Our LMC team referred to as e-disclosure and predictive will deploy these experts to work with coding systems), where a technology-based in-house legal departments to use data to solution is used to manage large quantities derive value and prevent risks. of documents in litigation. These systems can now out-perform junior lawyers and paralegals in reviewing document sets and isolating those most likely to be relevant.
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Roles
The role of the General Counsel has •• Role 3: Steward changed over time and differs across The third role is that of the steward. Summary jurisdictions. As legal and compliance Much of the responsibility here is for work increasingly attracts the interest of risk management, but, in this capacity, boards and investors, the GC is becoming the GC also protects the reputation of LMC identifies four roles of the a more central figure in commerce and the business and oversees compliance, General Counsel: industry. GCs also seem to have become contracting and governance. 1. Ambassador the custodians of the reputations of their •• Role 4: Operator businesses, perhaps not in the standard 2. Strategist Finally, the operator fulfils a role to run job description, but most notably when 3. Steward the legal department as a business disaster strikes. and is responsible for operations, 4. Operator technology, data, innovation, process, Consistent with Deloitte’s analysis of other project management, as well as supplier members of the C-suite, LMC identifies selection. four roles of the GC (and if all four roles are played by the GC, we do generally regard We also welcome collaboration amongst These four roles can only be undertaken the GC as a board-level position). COOs from legal departments, the best successfully if GCs have a deep example of which is CLOC (Corporate •• Role 1: Ambassador understanding of the markets in which they Legal Operations Consortium), a rapidly The first role is that of an ambassador, operate and a complete familiarity with expanding community of COOs that has the internal and external personification the culture, values, strategic direction and come together to share best practice, to of legal issues and legal risk. In major potential risks of their businesses. educate, and collectively drive change in matters, this is the person who leads the way that legal services are delivered. discussion with counterparties, One of the most significant recent regulators, public authorities, and developments in the world of in-house external counsel; who builds respect departments is the growing number of and trust with key stakeholders; who appointments of chief operating officers, is the first point of contact for leaders also known as directors of operations who need legal help; and who develops or chiefs of staff. GCs who create these relationships across their organisations. roles are often frankly acknowledging that in many legal departments it is not •• Role 2: Strategist possible for one person to be ambassador, Second is the strategist. This person rises strategist, steward, and operator. COOs above the turmoil of daily legal service take on the role of operator and so are to ensure long-term stability in legal responsible for the day-to-day running of support for the business. The strategist is the business. This is a development that involved across the life cycle of strategic Deloitte welcomes. initiatives—new markets and products, acquisitions, investigations, disputes, and more. The legal strategist sits next to the CEO.
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Four Roles of General Counsel
Represents the legal Provides leadership
position of the Leading Edge Strategist in determining company internally strategic direction and and externally aligns with business strategies Ambassador
Execution Threshold ce Performance an m
Perfor Legal Function
Control
St Protects and ewar Balances costs and preserves the assets service levels to fulfil of the organisation d responsibilities Operator
The four roles of General Counsel can only be undertaken successfully if they have a deep understanding of the markets in which they operate. It is also imperative that they have a complete familiarity with the culture, values, strategic direction, and potential risks to their businesses.
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Predicting the Future
No one can forecast the future of in-house One of the jobs of Deloitte’s LMC legal departments with scientific certainty. team will be to monitor multiple well- Summary Nonetheless, when based on solid known variables, such as whether legal research, extensive data, experience from departments should include compliance ••A key component of LMC is related fields and centred on sound theory, functions and determine the balance horizon scanning some views and predictions will be more between internal and external provisions. reliable than others. We will also focus on more advanced ••Deloitte aims to lead the way issues, many of which are discussed in legal forecasting A key component of LMC is horizon in this paper—such as the use of legal scanning, thinking ahead and helping process analysis, the uptake of project ••Deloitte’s LMC team will clients to identify important trends to management, the deployment of legal monitor, report on, and anticipate likely developments. Deloitte technology, the exploitation of data, encourage improvements aims to lead the way in legal forecasting, and the move from traditional reactive within legal departments based on robust methods. We will no fire-fighting to more proactive legal risk doubt miss some innovations, but we management. These are developments plan to provide a road map for improved we will strongly encourage, and monitor process and strategic navigation. continuously with regular reporting.
More than this, the LMC philosophy is not In thinking about and shaping the future, simply to try to predict and then accept our increasing emphasis will be on what the future. It is to work with clients in businesses actually need rather than on creating the future. In-house lawyers are what lawyers think they need. The long- the customers and, in our view, should term strategic health of in-house legal be driving much of the change in the legal departments will depend on their ability to market. The collective influence of the in- help identify and then satisfy their clients’ house community is huge and we believe actual needs better than other providers. this influence can be harnessed in driving the industry toward the more widespread use of the techniques and technologies discussed in this paper.
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Transformative
•• Legal as business Efficient leader •• Higher level •• Resources are resources focusing on higher level Established properly allocated Legal Service Delivery Transformation across legal activities •• Established •• Formal vendor •• Established proper measurable management Forming attorney to staff Service Levels of outside legal ratio and Outsourcing service providers •• Leveraging outside agreements with •• Assessing proper •• Utilising a counsel and other external providers attorney to staff transformative legal service ratio •• Standardised sourcing approach Ad-hoc providers processes and •• Reviewing sourcing •• Building or •• Implementing programme buying predictive and use of outside management • Lack of proper processes for technologies and • legal providers discipline across attorney to staff standardisation in tools to enhance legal ratio •• Reviewing some areas of legal legal processes processes for •• Utilising internal •• Utilising leading •• Limited sourcing standardisation •• Pursuing cost tools and technologies and synergies •• Manual processes •• Researching technologies tools to automate and pooled available key processes •• Costs are poorly •• Evaluating resources with technologies tracked and often cost reduction •• Implementing other business areas (such as surprising •• Cost and scope and additional cost reduction Regulatory, IT) leakage identified efficiencies and additional efficiencies
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Managing Change
This paper is a call for change and a of the department leaders needs to be transformation in the way that legal given clear responsibility for change and Summary departments are managed. It is also a call the rest of the senior team must offer unconditional support for the process for the introduction of new technologies ••Changing from a traditional with different ways of sourcing legal work, of change. legal function to a department and a call for alterations in operating that is geared for the next structures with an allocation of new roles Following our chapter on 'Roles', it makes and responsibilities. sense that this individual is the COO of the 10 years—in technical and function and he/she should have the time human capabilities—requires Intellectually, most GCs may find our to devote to the initiative. It also helps to a structured and managed arguments compelling, but will rightly see a have an external catalyst, either someone process series of obstacles to the brave new world from within the business, but beyond the ••To transform successfully we predict. The reality is that most legal immediate department, or an external the way legal departments departments are already stretched to their individual or organisation. An external limits, with little capacity for bringing in new participant can nudge the project along are currently managed, management structures. Changing an in- and call regularly for progress reports, there must be unconditional house function sounds like trying to change expediting implementation. support of change from senior clothes while riding a bicycle. GCs say that if leadership they could press “pause” on daily functions, It is also vital that leaders provide a clear ••It is critical for leaders to this would allow them to manage change. vision for any transformation programme, provide a clear vision for the It seems there is no time for strategy and within an easily understood statement of planning, and still less for transformation where the initiative is heading. The vision transformation programme programmes. Additionally, some of their in- must be underpinned by a clear business house lawyers might be conservative and imperative (if there is no relevant benefit resistant to changes in working practices. to be secured from change, there is little There is also the argument that there is no point in the upheaval). In turn, there should budget for change. be a strategic plan, supported by project management. In working with tax departments over the years, we have helped address For many lawyers, this type of structure similar obstacles. One clear lesson is that may appear excessive. In our experience, radical, beneficial change rarely happens if this kind of approach is not adopted, the spontaneously. To change from being a transformation is likely to fail, disappoint, traditional legal function to a department take too long, or not get started in the that is geared—in technical and human first place. capabilities—for the next 10 years requires a structured and managed process. Another critical success factor is that one
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Supporting Research
Many of the arguments and techniques products and services are changing.1 Research and data, however, can only take presented in this paper are based on We have also been influenced by research us so far. They can point us, for example, to research. Some of this work has been that has been undertaken by other historical best practice and they can enable undertaken by or for Deloitte directly. individuals and organisations, such as us to compile case studies of interesting Deloitte Legal commissioned a study of 243 Richard Susskind, Mari Sako, and the Dutch and outstanding achievement. However, global legal services purchasers in 2016. Association of GCs. they cannot give rise directly to innovation. If we are copying the best practice of Many of these purchasers felt that their We believe that Legal Management others, we are clearly not innovating. own roles and businesses had changed Consulting should be an evidence-based and become more complex, as well as activity, rooted in the real world. Fresh ideas and entirely new approaches more resource-constrained. Just under half come from the imaginative and creative (44%) said they found “doing more with We have also found less formal sources to activity of human beings. At Deloitte, we less” the most challenging part of running be invaluable—face-to-face meetings with do not pretend to have an endless store of or working in their corporate function. in-house counsel, discussions at seminars groundbreaking solutions but our aim—by They expected the service provided by and events, the published commentary of acting as experts and enablers, armed external advisers to also evolve, but these GCs. In combination, the structured and with LMC techniques—is to help our clients expectations were not currently being met more anecdotal evidence offers an evolving think and work differently. in a number of crucial areas. As a direct picture of the legal market. result, the expectations of legal services
We are conscious that many exciting new research methods are evolving today, most notably in the fields of ‘big data’ and predictive analytics, and are exploring ways in which these can further our understanding of the legal world. Deloitte is investing heavily in these emerging fields (not least in audit and tax) and we are gaining confidence in our ability to take large data sets (our data, client data, public data) and identify trends and patterns that traditional techniques could not.
Further research in many directions is no doubt needed. We must keep refreshing our thinking and tools in light of experience. Deloitte will undertake some of this research. Some research, again, will no doubt be undertaken by other businesses and universities and we will monitor these carefully. Where we think there are gaps in our understanding, we will fill the gaps ourselves or encourage research to be conducted, perhaps in universities or the Deloitte University.
1. Deloitte Global Study of Major Global Purchasers. www.deloitte.com/legaltrends
21 The Deloitte Approach—Legal Management Consulting
Epilogue
Today’s corporate legal department faces multiple challenges: a heightened regulatory environment, increased workloads, the acceleration of new technological advancements and growing demands from within the business. Companies need their General Counsel (GC) and legal departments to keep pace with the commercial needs of the business—while at the same time, legal teams are increasingly being asked to do more with the same or fewer resources.
Personally, I believe that these developments do not present organisations with roadblocks—I see the current business landscape as an opportunity to transform an area of the business and to extract more value for the company. Changing regulations, technological disruption and globalisation create a compelling reason for legal departments to change their operating model, achieve greater efficiencies and increase the value they deliver back to the business.
In this paper, we introduced a Deloitte approach to helping GCs overcome the challenges that legal departments are facing today. In developing this approach, we brought together leading experts in law, operating model transformation, business and technology to focus on how business could modernise the way legal needs are addressed. The philosophy of LMC builds on a multidisciplinary and integrated approach that includes three essential components: mainstream management consultancy, risk advisory services and expertise in legal department operational management.
Deloitte pioneers change and stays at the forefront of a world that is in a state of perpetual transformation. Our teams stay abreast of market and industry trends and continuously develop new, technology-enabled offerings and services to meet your needs. Research and development are a part of our DNA—and we are committed to staying ahead of innovation trends by making continuous investments in the future of work and technology.
At the foundation of Deloitte’s integrated service delivery model is over 2000 legal professionals around the globe providing counsel when and where it is needed locally. Deloitte Legal professionals have a reputation for listening to the unique needs of the individuals we support each day—focusing on what is most important in order to make an impact that matters. Legal Management Consulting is just one example of how Deloitte Legal is delivering the future of law, today.
Piet Hein Meeter
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Key LMC Contacts
Learn more about Legal Management Consulting by contacting one of our global leaders today.
Piet Hein Meeter Chris de Jong Global Managing Director— Tax & Legal Deloitte Legal Amsterdam, The Netherlands Amsterdam, The Netherlands +31 882887910 +31 88 2886882 [email protected] [email protected]
Tony Reid Klaus Gresbrand Deloitte Advisory Deloitte Legal Jacksonville, FL, USA Duesseldorf, Germany +1 904 665 1405 +49 211 8772 2501 [email protected] [email protected]
Michael Caplan Mark Schroeder Deloitte Tax Deloitte Legal Baltimore, USA Shanghai, China +1 571 766 7189 +86 21 61411043 [email protected] [email protected]
Karina Mowbray Shelby Austin Risk Advisory Financial Advisory Services London, United Kingdom Toronto, Canada +44 20 7007 6573 +1 416 202 2609 [email protected] [email protected]
Ignacio Sanjurjo Muriel Féraud-Courtin Deloitte Legal Partner — Legal Barcelona, Spain Deloitte Legal France/Taj +34 932304848 +33 (0)1 55 61 53 72 [email protected] [email protected]
Marc Van tieghem Laga Law Firm — member of Deloitte Legal Antwerp, Belgium +32 495522650 [email protected]
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Experience the future of law, today
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