It’s very easy, as an overworked GC, to get swept up in the transactional, day-to-day elements of the job. For too long in-house legal has been seen as a tactical, service-delivery function… less part of the business team, more a machine to deliver legal services and keep an eye on risk; producing documents, processes and playbooks to be used for or by the business, with little or no involvement on how they could deliver true, meaningful strategic value.
But times are changing.
The very best GCs are taking a strategic medium and long-term approach, putting in place robust plans that move legal teams from being about only ‘service provision’ to demonstrate the many ways in which legal can play a fundamental role in business success, organisational growth and cultural development, as well as driving wider societal and environmental impact. In plain English, this means placing ESG at the top of the agenda, and demanding measurable commitment to ESG from their own businesses as well as from panel firms.
But wait a moment. Can GCs really have an impact at this level? On areas of the business that don’t have an obvious need for immediate legal support?
We’ve previously talked about the ways lawyers need to understand the true success of an organisation as well as its strategic needs, if they are to have a strategic impact. And we have long-argued that to understand the true success of an organisation you cannot ignore the people — the human systems fundamental to long-term business and societal value.
In our recent article How to build a human-powered law firm we tackled the thorny issue of how people screw up law firms. The things that create the most value, risk and harm — all concepts that lawyers base their life’s work around — are human beings.
We believe that law firms should become places that enhance well-being for all legitimate stakeholders as well as create positive externalities to the environment and society. We believe a law firm or legal services provider can both maximise profits and deliver value to its stakeholders by establishing a mature institution. And we think GCs are best-placed to promote this, using the legal panel review process to assess overall maturity, as well as to require certain standards in terms of D&I, wellbeing and ESG, as part of the process. This means moving on from simply requiring them to provide self-reported stats demonstrating minimum standards, but rather independently measuring the lived experience of the firm’s culture and developing mature, value-based relationships.
Any performance-measurement must look beyond the quantitative reporting to consider both its financial and human value if it is to adequately take this into account. And if we can’t capture, measure and communicate this in a way people understand, and that is quantifiable — compared to other organisations, to share good, bad and indifferent practice — we’re missing a key element of organisational value and maturity.
The DNA Diagnostic has been based around the OMINDEX®, a methodology that has been tested across academia, investment professionals and corporates over seven years. It’s a full health check that captures and measures all value and risk elements arising from human stakeholders. It looks at 32 key factors to diagnose the human health of an organisation. Indicators of this include purpose, values, principles, culture, decision-making, engagement, trust, diversity and inclusion, wellbeing, retention, innovation, burnout and more. In short, it is a comprehensive study of the true health of your organisation, from the perspective of how people generate (or remove) value.
It is through this approach that GCs can gain the insight required to not only fully understand the value their panel firms offer (beyond just workloads and billable hours) but also how mature they are as an organisation, in terms of wide-reaching ESG and ethos.
Let’s explore that in a little more detail
Understanding how GCs can play a part in requiring panel firms to transform contracts to factor in both environmental and societal responsibility is not a hard stretch. Activity such as this sits firmly in the ‘tactical support team’ frame that we’re historically used to and allows them to have a tactical impact in areas such as procurement, finance, HR and more.
But when asked to consider the value panel firms offer at a more strategic level — indeed helping to fundamentally shift the way they think, operate and feel, a more open-minded approach can be required. Or, perhaps it is a more informed approach, that’s required?
One of the fundamental cornerstones of getting the very best from panel firm relationships lies in understanding all stakeholders. Their needs, wants and also the areas of risk, success and opportunity. This means not only understanding how the firm performs at a transactional level, but also the reality of people versus the public image a firm portrays to clients and the market.
Let’s take an example. In panel firm number one you might have a team of lawyers with a notable number of people heading towards burnout, as well as several people on leave due to mental health problems. Despite both expectations and what they’d wish, these lawyers are unlikely to be able to work well, or to add value to the business. Allowing this to continue will devalue the relationship you have with this panel firm, as well impacting on speed and quality of work. It, therefore, has a clear and significant impact on overall organisational potential and value.
Conversely, in law firm number two, you might have a team of lawyers with structures and measures in place to monitor burnout and mental wellbeing, as well as to support lawyers experiencing this. They might have a programme of flexible and ‘at-home’ working. Perhaps they’ve binned the ‘we’re available 24|7’ mobile phone numbers and put in place clearer communication methods that support full team wellbeing. As a result this team is likely to be a more productive, ‘valuable’ workforce. They’re likely to have better working relationships with you, delivering greater value to your in-house legal team.
We can see how law firm one is therefore less valuable to your business — less mature in commercial terms — than law firm two.
Connecting Purpose and Performance
The output from the DNA Diagnostic process is designed to be viewed alongside financial performance reporting, WIP and work done reports, as well as credit reports and the other ‘numerical’ data firms provide when panels are up for review. It allows GCs to see how the ‘human aspects’ are impacting on the bottom line, and overall value of the relationship, as well as what you need to do to fix the problems.
The DNA Diagnostic approach follows four steps:
- An introductory meeting and workshop to set up and manage the project
- Running the OMINDEX® Workforce survey to gather quantitative data on key culture (value and risk) factors for each panel firm
- Providing you with a summary report and recommendations
- Running a workshop with selected firms to align, ideate and agree actions to deliver the optimised relationships and purposeful value envisaged.
Whether we’re looking at internal stakeholders and wellbeing or applying the same approach to panel firms and their clients to understand what matters most to them in terms of environmental and other ESG credentials, adding this study of the human elements, alongside the financial, means GCs get a meaningful, 360 degree analysis of panel firms as a whole. Armed with this you’ll be able to understand where your relationship with panel firms is, compared to where you thought it was, how to maximise return on this relationship, the things you want to change, how to demonstrate authenticity externally and how to present this in an evidenced, meaningful way. Together, we believe that this presents a complete picture of an organisation’s value, health and maturity. And, importantly, this great insight can empower General Counsel to truly transform the value panel firm relationships, in turn, are able to deliver through the wider organisation.
Our work with The Maturity Institute on the DNA Diagnostic is amongst the most meaningful work we do at LexSolutions in supporting law firms who want to put authentic ESG at the top of their agenda. Will you work with us in 2023 to build your organisational maturity?
Contact Manu@lexsolutions.com for a conversation on how we can work with you.
How can General Counsel ensure that their efforts to develop and modernise the legal team are not just short-term fixes,…
Which kind of law firm do you sell to your clients? An article featured in an issue of PSMG LLP…
The role of general counsel is changing. Where once it was a service role, creating documents and processes that were…
People screw up law firms In 2011 Stuart Woollard, author of The Mature Corporation - a Model of Responsible Capitalism,…