The 'More For Less' Challenge in Legal Departments
Sue Reisinger | Corporate Counsel - October 2, 2017
Four years ago, Richard Susskind published the first edition of “Tomorrow’s Lawyers: An Introduction to Your Future.” With the rapid changes in the legal profession, tomorrow is now today.
The second edition of “Tomorrow’s Lawyers,” widely considered a must-read for business of law and legal education professionals, focuses more sharply on how artificial intelligence, alternative business structures, low-cost law firm service centers, legal tech startups and evolving in-house roles are changing the way legal services are delivered and how law schools are educating students to meet those changes.
You’ll recall from Susskind’s first edition his credibility as a futurist: He’s devoted his career to theorizing about and planning for the legal profession’s long term. (You might also remember he predicted in the first edition a relentless march by the Big Four accounting firms into the legal services market, a prediction proven accurate last month when we broke the story that PricewaterhouseCoopers is launching a D.C. legal services office.)
With a doctorate in law and computers from Oxford University and as the author of nine books on the subject, Susskind has worked in legal services and technology for more than 30 years. His first edition of “Tomorrow’s Lawyers,” was published by Oxford University Press in 2013. The second edition came out this year. In the preface to the second edition, Susskind says that his main purpose of the book is “encouraging open-minded debate and reflection, with a view to improving our legal systems.”
To that end, ALM during October is publishing excerpts across several of our brands from the second edition to spark thought and conversation about the industry’s future among the legal profession’s leaders. ALM editors and reporters have solicited reactions—positive and negative—to Susskind’s ideas from law firm chairs, top legal educators, general counsel, law students, industry analysts to get their take.
The 'More-for-Less' Challenge
Clients of lawyers come in many different forms. There are in-house lawyers, who work within large organizations and who spend mightily on legal advice when they have major disputes to resolve or large deals to conclude. There are managers within small or medium-sized businesses, who have properties to rent, employees to engage, and all manner of regulations with which to comply. And there are individual citizens, who may need legal help with such matters as moving house, coping with debt, or pursuing some personal injury claim. Although diverse in nature, these clients currently share a big challenge—generally, they cannot afford legal services when delivered in the traditional way.
General counsel, the individuals who run in-house legal departments, invariably say that they face three problems. First of all, because of difficult economic conditions, they are under pressure to reduce the number of lawyers in their teams. Second, they are being asked by their chief executives, chief finance officers and boards to reduce the amount they spend on external law firms. And yet, at the same time, third, they say they have more legal and compliance work to undertake than ever before; and that the work is riskier too. Many general counsel tell me that they are being required to reduce their overall legal budgets by between 30 percent and 50 percent. On the face of it, this is unsustainable. These clients from major companies and financial institutions are facing the prospect of an increasing workload and yet diminishing legal resources. Something surely has to give here. I call this problem the "more-for-less" challenge—how can clients, working with their external law firms, deliver more legal services at less cost?
The more-for-less challenge is not just a conundrum for in-house lawyers. Small businesses face a similar dilemma. These traders do not have their own specialist in-house lawyers, and whenever they are in need of serious legal help, they must currently turn to external law firms. In these demanding times, however, many business people confess that they cannot afford lawyers and often have to run the risk of working without legal guidance. As for the consumer, although the law is central to all of our lives, dramatic decreases in public legal aid mean, effectively, that only the very rich or the very poor any longer have the means to afford the services of lawyers. Citizens face the more-for-less challenge too.
I believe the more-for-less challenge will underpin the next decade of legal service. The more-for-less challenge will, I expect, irreversibly change the way that lawyers work. —Richard Susskind, "Tomorrow's Lawyers, Second Edition"
General counsel at major companies and financial institutions are facing the daily challenge of diminishing legal resources to tackle an increasing workload, according to "Tomorrow's Lawyers, Second Edition," a book by Richard Susskind.
Susskind calls it the "more-for-less" challenge, writing that many GCs have told him they are being required to cut their budgets by 30 to 50 percent, a situation he calls "unsustainable."
Lawyers who are or have been general counsel told Corporate Counsel that the idea of more work and fewer resources isn't necessarily new, but it is certainly a powerful influence on how legal departments operate.
LaTanya Langley knows about increased workloads. She joined BIC, the French company best known for its ballpoint pens, about two years ago as GC of Latin America, the Caribbean, Middle East, Africa and Asia-Pacific. She later added the title of general counsel of BIC's largest business unit, stationery, along with an anti-corruption group compliance officer role.
"So, I think Susskind's 30 to 50 percent figure is inaccurate," Langley said. "Yes, there is that much of a cut to legal spend, but general counsel are also being asked to become responsible for compliance functions, corporate security and often roles that human resources used to play—work that we don't even have a budget for. So the 50 percent number should be much higher."
Langley's experience and Susskind's premise were reflected in an annual Consero Group survey of general counsel last January when the largest number—41 percent—said their main problem was access to budget resources.
While Langley agreed that the more-for-less strategy is expected of general counsel, she also believes they are better equipped to handle the challenge than GCs of past decades. "General counsel today have more diverse portfolios and a different skill set," said Langley, who is based in Connecticut.
"Many have manager experience, are more business-oriented, have supply chain work experience and are more tech savvy," she explained. "They will be able to do more with less because frankly they are becoming more like general managers."
To GCs who feel under the gun to make deep cuts, Langley advised that they "get more creative." They can take innovative approaches to using technology to find more efficient ways to deal with outside counsel, she said, while becoming more aggressive on alternative fees and pricing. "Perhaps you can also restructure your team to create centers of expertise," she added.
Mark LeHocky doesn't buy that the more-for-less trend is anything new. LeHocky is a mediator and arbitrator in San Francisco, who spent over 12 years from 2000 to 2012 as a general counsel, first at Dreyer's Grand Ice Cream Inc. in Oakland, California, and later at Ross Stores Inc., a department store chain based in California.
"The pressure for efficiency has always been there," LeHocky said.
He also disagreed with Susskind's "unsustainable" premise. "Things are only unsustainable if everyone keeps doing the same things the same way," he said.
"But innovators figure out how to get more bang for their buck," he added. "And it is not just about flat fees, discounted rates or other metrics that measure only a portion of the overall cost. It's about taking a fresh look at the big picture, at what work is needed, what can be done differently, and by whom."
One example he offered from his GC days was adopting an early dispute resolution model to resolve litigation, as opposed to fighting everything. "We dramatically reduced overall legal costs," he added.
Maureen Brundage, the former general counsel and chief ethics officer at property and casualty insurer Chubb Corp., said she thinks the 30 to 50 percent estimate for department budget cuts is too high. Brundage, now a senior adviser with legal consultant BarkerGilmore, conceded though that most legal budgets have been trimmed while the amount of legal work has grown with more compliance, risk management, cybersecurity and corporate governance matters.
"However, this is not different from most areas in a company," Brundage noted. "I think most areas, especially those on the operations side, would say they have to do more with less."
Asked what advice she would give to a GC who has to make deep, or even harmful, cuts, Brundage suggested the general counsel sit down with senior management.
"Give concrete examples of where the cuts go too deep, what the cuts will mean, what work the department no longer will be able to do—and what risks that raises," Brundage advised.
She said a GC should cultivate good relationships with other members of senior management as well as with the business clients.
"A company is a very political organization, and a general counsel needs to keep that in mind and be strategic," she said. "A general counsel needs to take the time to get buy-in from the relevant business leaders."