Designing the Smaller Law Department

Author: Richard G. Stock - Lexpert, Vol 11, No 1 (October 2009)

The majority of law departments outside the public sector have fewer than five lawyers. Those in Canadian-based companies are likely to have grown to this size to accommodate the expansion of the business. Others would be the "country counsel" of multi-national companies. Workload and cost pressures are prompting all law departments to take a closer look at their configuration and operating practices. A number of principles and guidelines can provide a helpful reference during a review and in planning for 2010.

Many of the following guiding principles have been adopted by newer and smaller law departments.

• the value of services provided should be based on feedback from internal users

• users, be they the executive team, the line/program departments, or central/corporate services, should be knowledgeable, efficient and accountable users of legal and other services

• the proposed services must be measurable on both the qualitative and quantitative dimensions (benchmarks, performance assessment)

• the services must deliver best value outcomes, thus the benefits must outweigh the costs

• there should be no duplication with services provided by outside counsel, or in any other area of the organization

In addition, there are other hallmarks of good design for a strong law department. These include

• a recognition of and direct alignment with the organization's strategic objectives

• a significant use of technology to minimize reliance on administrative or clerical support

• appropriate resourcing of the internal service delivery of legal services

Without doing so explicitly, most progressive law departments have retained Centre of Expertise principles, since they are compatible with best practices in legal services. Structures, policies and processes as well as the economics of all types of law departments have been benchmarked across the country for the last 15 years. Such Centre of Expertise features include

• centralization of strategically critical resources and activities (e.g. legal services)

• two roles

• policy / corporate oversight, often from the vantage point of the corporate secretary; and

• an operational link to help program managers apply policy/tools (guidance)

• contracts (service level agreements) for service, performance measures and price

• quality assurance of services

• service delivery and "seamless" alignment of all members of the law department with user departments

A combination of usage protocols and customized agreements will always deliver savings from law firms and efficiencies in the law department that are significant while respecting the principles described above. Furthermore, the organization should benefit from "best-in-class ", cost-effective legal services delivered by a combination of inside and outside counsel resources. Every organization must be capable of achieving planned savings with limited risk and few conditions.

Law departments have the responsibility to support their organizations in its efforts to live with the design imperatives and principles described above. The advent of technology, usage protocols, convergence and partnering with outside counsel all have strong precedent for what can be observed in progressive law department teams. Clarity of purpose and strong leadership in the new or re-designed law department are the essential ingredients for successful implementation.

General Counsel will typically lead the legal services team and also act as strategic legal-business advisor to the corporation. More specifically, the GC will

• set the direction and tone of the legal department, and ensure that department and individual objectives are aligned with those of the corporation

• lead and coordinate certain capital projects, as well as other selected strategic ventures

• provide advice to the organization on corporate governance and policy issues

• serve as a resource for the other members of the legal services team, but without needing to micro-manage them or review all of their work

• manage the corporate secretarial function with support from qualified technical staff

• be accountable for all of the organization's legal expenses, both internal and external

• manage the relationships with outside counsel

It is important that the General Counsel make enough time to think about the needs of the organization and ensure that internal and external legal resources are sufficiently focused upon serving those needs. The number of hours given by the General Counsel to legal services proper compared to administrative and leadership duties should not normally exceed 1,200 hours per year in the smaller law departments of most companies.

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