Legal teams are paying their way

The impact of company lawyers is growing as they achieve measurable effects

Chief executives and their general counsel have often struggled to put a value on what a legal team does for the business. When asked, their response is usually a laugh or a sigh, and comments such as “it’s difficult and imprecise” or “it’s downright impossible”.

They can quantify budget cuts and money saved, but few have the numbers or the means to measure accurately a legal team’s contribution.

At least, that used to be the case. Chief executives and general counsel of the most innovative teams who took part in this report had no trouble describing precisely where their legal departments contributed to the overall success of the business. Many also talked in depth about the data they are now collecting and analysing to measure that value.

Pat Gelsinger, chief executive of VMware, the technology company, says: “While any legal department has to guarantee that risk is minimised, ours also creates value. There are metrics associated with everything they do.”

It is not all about measuring costs. For example, the detailed metrics that the legal team collects on new customer contracts are used by the business to understand how well it is meeting the needs of its customers.

Data showed VMware’s legal team how to simplify every step of the company’s contract drafting, negotiations and approval process. The team then replaced complex agreements with simpler language. They also reviewed and analysed terms that had been used in previous contracts and removed those where the company always made concessions, saving hours of costly and time-consuming legal negotiation.

The time it takes to sign a new customer contract has halved, helping the business do deals more quickly and improving the customer experience.

Drawing on the experience of her parents running their own business, and also on her time serving on active duty in the US Navy, VMware general counsel Dawn Smith tries to bring a business mindset to her role. “Unless we run ourselves as a business, are in charge of our own destiny, and can keep costs under control, then in five years someone will come and slash our budgets,” she says.

A legal operations team that Ms Smith created five years ago started by improving how it allocated work, outsourcing, e-billing and its management of outside law firms. But over time, the focus has moved to developing a strategy on collecting details of workloads, outcomes, cycle times, responsiveness and other useful information from the various new technologies the company has implemented.

Legal operations may not be the first place to look for eye-catching innovation, but it is arguably where the most important changes in the industry are happening. The proportion of North American companies with legal operations personnel — the staff assigned the task of managing the people, process and technology aspects of lawyers’ work — doubled to 48 per cent in 2015, according to a survey by the Association of Corporate Counsel. That figure is expected to jump again this year.

Such operational roles are likely to become even more important and influential as advances in technology affect almost every aspect of legal services.

Aine Lyons, VMware’s head of legal operations, says that “although we all recognise that the nature of legal service delivery has fundamentally changed, we are still figuring out what the implications of these changes are and how to respond to them”.

The legal team at publisher Hearst Corp­oration is currently training and coding a machine learning tool named Charlotte. Eventually, it will be able to create non-disclosure agreements with a few simple instructions and support the in-house team to take on complex litigation and M&A deals.

These kinds of operational innovations will have far-reaching effects on the legal industry by enabling in-house departments to handle more complex work more efficiently instead of using law firms. They also free in-house lawyers to concentrate on more complex strategic work.

For instance, Nasdaq’s legal and regulatory team has long invested in technology and process, and this year it tops a new ranking in the report, on driving transformation in business and industry more widely.

Led by general counsel Edward Knight, Nasdaq’s legal and regulatory group not only supports the business, but is an architect of many of its successes.

The team, which includes a market surveillance arm, provides consulting services to regulators and exchanges around the world.

Recently, it worked with Nasdaq’s technology team to develop the proposal for its new dark pool hosting business, Ocean.

Nasdaq signed Goldman Sachs as Ocean’s first client in October.

Innovative general counsel

Individual winner:
Laura Stein
General counsel and VP
The Clorox Company

Laura Stein has received the most nominations for the FT “Innovative general counsel” award over the past three years. She leads a team blessed with immense legal skill and the ability to see around corners. She sits on legal and humanitarian boards and is one of the most influential legal professionals in North America.

Eve Burton
Senior VP and general counsel
Hearst Corporation


Eve Burton is a member of the board and heads a high-energy team at Hearst Corporation managing legal services for over 360 businesses. She leads HearstLab, which fosters innovation and investment in early stage businesses led by women. She is also working on protection of journalists’ freedom of speech worldwide.

Reggie Davis
General counsel
DocuSign


Reggie Davis previously held roles at Yahoo! and gaming company Zynga, and is now at DocuSign. Described as the digital signature company’s “quarterback”, he plays an essential “offensive” and strategic role, engaging new customers and helping other general counsel manage digital transformations within their own businesses.

Verona Dorch
Chief legal officer
Peabody Energy


Verona Dorch leads a restructured team at Peabody Energy, a coal producer which is currently undergoing a transition to clean coal. Taking a holistic view of the business, she is supporting the company through its capital restructure, and rebuilding trust with customers and other stakeholders.

Ellen Fitzsimmons
EVP, corporate secretary and general counsel
CSX


Ellen Fitzsimmons has led a new and highly successful litigation and community engagement strategy for the transportation company CSX. As the company’s general counsel, she has built a highly respected team that embodies the company’s motto “Do the right thing, the right way”.

Donald Remy
EVP law, policy and governance and chief legal officer
National Collegiate Athletic Association


Donald Remy has helped the organisation and its members to communicate legal issues more effectively to the wider public and he ensures that those involved in decision-making considers the NCAA’s most important constituency — the students that participate in athletics.

Thomas Sabatino
General counsel
Aetna


Thomas Sabatino has championed diversity within the legal profession and has been a strong advocate for change in his previous positions at Hertz, Walgreens and United Airlines. At Aetna, he continues to use his profile and position to recognise and foster diverse talent, and hold people at all levels accountable when discrimination occurs.

Mark Van De Voorde
Chief legal and administrative officer
Victaulic


Mark Van De Voorde works for global mechanical pipe joining systems provider Victaulic. He pioneered the company’s “virtual law firm” model, building a deep bench of experts across 120-plus jurisdictions, and is a strategic adviser to the company’s management team on a range of business risks and commercial opportunities.

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