The Legal Ecosystem: Boulders, Hurdles & Glass Ceilings In-House (Part 8)

Topics: Business Development & Marketing Blog Posts, Client Relations, Corporate Legal, Data Analytics, Efficiency, Leadership, Legal Innovation

legal ecosystem

This is the eighth and final part of a series exploring the key players in the legal industry ecosystem and the pressure they are exerting and enduring. The author, Lucy Endel Bassli, was assistant general counsel at Microsoft and recently founded InnoLegal Services and serves as Chief Legal Strategist for LawGeex.

Part 8

In the last installment of this series, I wanted to review the role that corporate legal departments play in the legal ecosystem. It is easy to claim that without the corporate legal teams forcing law firms to behave differently, law firms and other providers would never change. While there is obvious merit to the old notion that “money talks,” I believe that it’s somewhat of an easy out to lay all the responsibility on those corporate legal teams.

While money is a natural incentive, there are many other motives that put others in the driver’s seat. Incentives like thought leadership, competitive advantage, and internal workforce changes are playing their roles too. Still there are a lot of eyes on corporate legal departments, and many legal service providers are waiting to see what they’ll ask for next, getting ready to reply with an “absolutely — we can do that!” attitude.

Therefore, I think it is time to bust some myths about the inner workings of corporate legal departments and disclose their limitations when it comes to influencing change in the legal ecosystem.

MYTH #1: In-house lawyers are all innovative

Here is the thing everyone forgets. Most in-house lawyers come from the very same firms that they are later procuring from — the training is the same, and the knowledge about how law firms work is the same. Nothing magical happens that transforms a law firm lawyer into an innovating machine just by virtue of changing jobs and going in-house.

To be fair, behaviors change over time as new in-house lawyers adapt to the sheer volume of work and the need to be more risk tolerant if they are to make any notable progress. But otherwise, the way in which they do their work remains largely unchanged. The appetite to accept risk may become a bit more tolerant, but the old saw of “that’s the way I’ve always done it” still governs their approach.

The big benefit of the in-house legal ops role is that the larger corporate culture helps influence the general counsel and other lawyers that indeed, change is necessary.

The reality is that lawyers by nature and experience either have the curiosity and interest in innovation or they don’t. Innovative practices can be taught, but without an incentive to innovate (ahem, law firm compensation models), why do it? In law firms, we all know that the business model penalizes innovation if that innovation leads to less billable hours, so only those that truly want to innovate will allow that latent gene to flourish once they go in-house because the personal rewards of efficiency will be enough incentive. So, going in-house certainly enables those already inclined to innovate, to do so with great success. Those without that inclination, however, move in-house and simply continue business as usual, unless or until they’re forced to change.

MYTH #2: Legal ops is naturally more successful in-house than in law firms

Ask any legal operations professional, perhaps over drinks after a long day at yet another legal operations conference, and they’ll be the first to admit that the lawyers in their department are the biggest hurdle to innovation. The eye-rolling is almost audible, when legal ops pros must respond to questions of how they manage change in their departments and how they are able to convince the lawyers that such change is a good idea.

The big benefit of the in-house legal ops role is that the larger corporate culture helps influence the general counsel and other lawyers that indeed, change is necessary. Legal ops can enlist the offices of the CFO and CEO as allies when pushing for data collection and metrics in the legal department. So, there are more “tools” to be deployed for change management, and a sense of urgency can be created even when other departments are getting accolades while legal is treated as “special” (but not in a good way).

But, convincing lawyers to change is just as hard in-house as at law firms. I recently heard from a legal ops pro at a well-known telco company that it took a year to get the in-house lawyers to allow electronic signatures for even a limited number of contract types. Even at some of the best tech companies with the latest innovative gadgets at their fingertips, lawyers are hesitant to put documents in the cloud, count their workload, provide a service-level agreement (SLA) or measure their turnaround times.

MYTH #3: Outside counsel panel programs are sure to influence the market

I don’t dispute that panel programs can have great benefits for pricing and diversity. In order to play in the sandbox, legal departments can demand certain basic features of their engagement with outside counsel. But in reality, the general programs only go so far. They create great buzz and conversation, which in itself is valuable, but there is little measurable and visible progress in innovation.

Real innovation comes one engagement at a time, between a creative law firm partner and a similarly creative in-house attorney contact. It is that deep collaboration between professionals where magic happens. No corporate legal panel program can have the same profound impact as proven case-studies, hard lessons learned from joint experimentation, and exhausting time spent sharing and problem-solving.

Real innovation comes one engagement at a time, between a creative law firm partner and a similarly creative in-house attorney contact.

Whether you view the approaches by DuPont, Cisco, or Microsoft as examples of great steps to changing the nature of the relationships or not, I’m not sure any one panel program can actually result in the sort of game-changing innovation we all seek. Any game changers, even at those companies, came as a result of personal initiative and leadership support. In the end and as always, it all comes down to the people.

MYTH #4: In-house legal teams are open to legal tech

Ask any legal tech company today and the answer will be similar — something along the lines of “…if we’re dealing with legal ops, then yes, they are ready, but once the lawyers get in the room, it all slows down.”

It is true. Implementing technology in the legal department is just as much of a boulder up a hill as it is at law firms. The decision-makers are lawyers (often the same lawyers that came from the same law firms before coming in-house); and technology-enabled legal practice is just not intuitive to most lawyers.

We can’t blame them. Lawyers are not trained on using technology, and in fact are trained to identify risks and mitigate them with fervor.

While there is progress with implementing some infrastructural technology inside legal departments, any technology that is perceived to create a “legal risk,” such as electronic signature, often is still not embraced. Certainly, the more cutting-edge technologies, like AI-enabled contract review and analytics, are a hard sell for lawyers in-house who are worried the machine may miss something. I wonder what we miss on those days where we have not had enough sleep because a sick child kept us up all night and who then proceeded to vomit in the car on the way to school, altering the entire course of the morning plan, but I digress.

In short, yes, corporate legal departments have influence because they hold the purse strings, but in-house lawyers are just as challenged to change as are lawyers at law firms (and as are professors at law schools, for that matter).

Resistance to change is nothing new for lawyers, regardless of where they work. Maintaining mystery about “how” the legal work is done and control of their work is still prevalent. Being efficient at the cost of increased risk is the cost of a process many lawyers are still not ready to pay.

All of this is changing, slowly, but it is. More lawyers with a tendency to be innovative are now taking those chances and pushing the needle in their organizations. That is how change will come about. One lawyer at a time… indeed, maybe one unicorn lawyer at a time… .