In-house and the Business - 'Change is coming' - totallylegal

?????By Nico Jansen?

Nico A. Jansen graduated in private law at the?University of Utrecht in the Netherlands and has a Masters of Business Administration (MBA) from Edinburgh Business School/ Heriot Watt University in Scotland. He holds the professional qualifications in marketing (A and B) of? the Dutch Institute of Marketing (NIMA) and the Diploma in Marketing of the?British Chartered Institute of Marketing?of which he is a?Member?and admitted as a?Chartered Marketer.?In his capacity as managing consultant of?www.legalmarketing.nl?he operates as an interim lawyer and marketer and holds a lecturing position in (European) Business Law at the?Faculty of Economics and Business Administration?of the?VU University?in Amsterdam. In 2011 he published ?Law & Self-Regulation. A legal and business perspective?.

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A legal department?s business functions?

In-house lawyers are rarely involved in decision-making at the corporate level and their involvement in key strategic decisions remains limited. This can probably, at least partially,? be explained by the professional and cultural differences between business managers and lawyers. The fundamental question in this respect is what the legal department can contribute to the business?

The answers to this questions can be used to structure a legal audit and set specific objectives, by top management and or the general counsel, to manage the company?s regulatory function. The potential contributions are in this blog evaluated for five business areas: strategic input, testing and contributing to strategies, reputation management, risk management and change management.?

Strategic Input

For strategic input the analytical and legal research skills in which lawyers are well trained can be used to identify regulatory developments and risks. However, managers should ensure, by giving lawyers a proper briefing, that the analysis is not just focused on legal matters, but translates the legal findings into practical business input.

The legal function can support the business in its strategy development process by a continuous process of analysing the relevant national and international regulatory environments. This involves monitoring of the relevant developments in the sources of law and self-regulation. Those who are interested in a model to do so should not hesitate to contact me.

The legal function can perform an internal analysis on the extent to which other functions identify and use regulatory opportunities, or are confronted with regulatory threats that interfere with achieving the function?s objectives. The results of analyses can be submitted to the company?s management as input into the strategy development process. They will evaluate the information to decide which points should be included in a SWOT analysis, which is used for corporate planning purposes.

Testing and Contributing?

Strategic options must be evaluated form a regulatory perspective to assess their feasibility and risks. However, lawyers in this planning phase should not focus primarily on the potential regulatory risks and problems, but also on the opportunities the regulatory environment offers for example to improve competitiveness and specifically the firm?s marketing mix. For testing and contributing, creativity and innovative thinking are needed. Lawyers will have no problems in developing legal options for legal problems. Whether they can contribute effectively to the process of developing creative business options is less obvious, since they are not by nature and education ?out-of-the-box? thinkers.

Reputation Management?

It is the legal department that protects the company from negative publicity by realising compliance, proper corporate governance, proper contracts and effective dispute resolution processes. The legal function can make contributions to the 6 C?s of reputation ( see my previous blog on this topic)

The drafting skills of lawyers can for example be used to write and update codes.? It is also the legal department that can point out the specific regulatory risks involved in doing business with counties with a poor reputation. An effective? role in protecting reputation requires the management of the company and the general counsel to set specific objectives related to reputation management for the regulatory function.

?Risk Management?

The mind set of lawyers is focused on identifying future legal problems in order to take legal measures to avoid legal risks. Lawyers tend to be risk-averse where managers operate in a setting where some risks cannot be avoided and are therefore considered acceptable. The two different mind sets need to be reconciled to make the cooperation with respect to risk management effective. It requires lawyers to consider legal opportunities such as reservation of ownership and contract clauses from a risk management perspective.

Change Management?

In case top management or the general counsel wants to change the role of ?legal? it will initially encounter, as always with change, resistance. It would, however, be beyond the scope of this text to devote detailed attention to the business theories on ?change management?.?

Change can be initiated by setting specific performance targets. Managing a legal department by performance management requires objectives to be set for all department?s employees. By introducing performance measurement, the legal function can align itself better with the wider business strategies.

Involving the legal function in strategy also requires other typical management tools such as job descriptions and policies for motivation, staff development, performance appraisal, remuneration structures and communication and reporting systems. Job descriptions, for example, can facilitate the alignment of legal with the company objectives and strategies by including the responsibility of analysing the legal environment and providing strategic input.? In general, agreed-upon structures and defined responsibilities are required for commitment and accountability.?

A more effective cooperation of legal and business functions can also be realised by forming teams in which business managers and lawyers work together. The Dutch multinational Akzo Nobel is an example of a company where drafting and finalising contracts are managed by multidisciplinary teams of which, as a principle, one or more in-house counsels are members. Every business unit has a legal account manager, who is responsible for ensuring that the business strategies and legal activities are aligned.

Conclusion

To increase the effective involvement of lawyers in business planning, the company and functional culture need to be aligned to their new role. Lawyers should be stimulated and trained to learn about the company and its strategies and to develop an extensive internal and external network enabling, them to increase the business focus in their work. The challenge for lawyers is to overcome their ?natural conservatism and self-reliance?, which does not contribute to being an effective management advisor.

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Feel free to leave your comments and questions below.

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Source: http://blog.totallylegal.com/2012/08/in-house-and-the-business-change-is-coming-.html

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