"All recipients of professional service...seem to be short of money...managers in business complain not only of shrinking budgets but also that they have more need of professional help...we call this problem the 'more for less' challenge."
So wrote Richard and David Susskind in The Future of The Professions - How Technology Will Transform The Work of Human Experts (Oxford University Press, 2015, p.108). The writers were reflecting the wide acceptance in the marketplace of this 'more for less' mantra as a well-established principle.
GCs and in-house counsel across the world embraced the challenge with gusto. No conference was complete without "more for less" powerpoint presentations. Even "new law" providers claimed it as a benefit in their innovative services. And Legal functions "drove" their teams to "deliver more for less" with the kind of ferocity that only lawyers can bring to bear on a problem.
And who could blame them? Afterall, as Mark Cohen observed, writing in Forbes as recently as January 2018, "Legal consumers, not 'smart lawyers' are now calling the shots...The corporate C-suite has mandated GCs to do 'more with less' ...[who are] more receptive to traditional law firm alternatives..."
But, to date, GCs and their teams that have taken the brunt of the "less" and are doing the "more" because they are employees. They feel they must "deliver", or else. I have met none - not one - who has begged their CFO for a cut in their Legal spend.
This hardworking band of cost-cutters are caught in a trap exacerbated by the advance of new technology, the resilience of the billable hour and the glacial pace of so-called "disruption in legal services."
But private practice is soon to be caught in the same trap as some of its number, rightly, start to woo their members into behavioural change. Then everyone will be doing it.
But there is a way out, now, if all dare to take it:
Step 1 Make the board's SWOT Analysis the Legal function's core document
The board's SWOT Analysis is, at any point in time, the Legal function's best friend. And if the board doesn't have one, get someone to write one for them for contained in it is all Legal needs to kill off 'more for less' for good. Why?
Because the Board's SWOT Analysis is the board's risk register, by another name. And the anticipation/management of risk eats 'more for less' for breakfast, if sold in properly.
Step 2 Write a point-for-point SWOT Risk Management Plan
Explain, in detail, how Legal will mitigate each point in the Weaknesses list, and each point in the Threats lists and also how Legal will reduce the risks of "the business" not capitalising on its Strengths and Opportunities.
Some will counter that Legal is only concerned with the legal risks in the SWOT which will also contain business and reputation risks. I disagree. The purpose of the in-house function is to enable better decision-making and implementation across the business, and Legal should therefore engage with all risks. That's why it's "in-house".
Step 3 Budget from "zero" to support the SWOT Risk Management Plan
Typically, in-house function development lags business development. Business strategic decision-making rarely sweats too much over the costs of the Legal function implications of strategic decisions as much as it does it over Finance, Marketing, Sales, Operations and IT.
That's because "the business" doesn't always understand Legal and has a vague and,not entirely unreasonable, assumption that Legal "costs too much". Risk aware private practice firms will be helping to dispel this view, before they are forced to do so.
That's where the "selling in", with the proactive support and collaboration of private practice, of The SWOT Risk Management Plan to the business will help the board see a direct correlation between business strategy and Legal spend.
That's not to say that the business will always be able to afford the ten dollars required to pay for the ten things that Legal says the business needs to risk manage the SWOT.
It may only be able to afford seven dollars. But then it should just expect to receive seven things and take a calculated risk on the other three, provided the seven things are delivered as cost efficiently as possible and, crucially, no lawyer on the team performs a diving catch to do one of the three things not covered in the budget. The latter lack of discipline on some Legal teams is part of the current problem.
The success of this process depends on a level of behaviour change within Legal which many may find painful. But it's a far less painful way to live than 'more for less'. Instead, the business gets what it pays for, no more but no less.
I will be facilitating a workshop on Strategic Budgeting for Lawyers in London on Wednesday 25th. July 2018. Click HERE for details.
Ciarán Fenton