General counsel are often untapped fonts of strategic wisdom and business insight within their organisations. They have an overarching view of business affairs across internal divisions and a deep understanding of company and regulatory requirements. This enables them to provide a holistic perspective on how major decisions could affect the organisation as a whole in the short, medium and long time.
However, interest in the input of general counsel and chief legal officers (CLOs) on business decisions remains mixed in Australia. Less than a quarter (24%) of CLOs are always consulted by their executive leadership teams, while less than half (49%) are asked for their input most of the time, according to recent ACC research.
So how can general counsel and CLOs better position themselves as strategic advisers who lead value-driving legal departments?
1. Don’t shoot the messenger: Business dreams vs legal realities
Business division leaders often have a tunnel-vision focus on short-term revenue gains, sometimes to the detriment of the organisation’s longer term interests. These include its legal and regulatory obligations, its market position, its reputation among stakeholders, and its strategic growth plans. General counsel are often forced to be the bearers of bad news in executive meetings, which rarely endears them to their colleagues.
Differences in internal priorities may be linked to inconsistent C-suite prioritisation of risk management across the business. Thomson Reuters research has found that less than half (46%) of organisations have integrated their approach to risk within business culture. In addition, only 41% have defined their view of risk management at board level. Just over a quarter (27%) of organisations require board input and approval for major risk-related initiatives.
These potential conflicts of interests within organisations can lead to division leaders treating general counsel who identify risks in business proposals as the problem, and to dread having contact with them. Their relationship difficulties may be exacerbated if the GC cannot quickly suggest workarounds that enable the proposed deals to go ahead with comparable results.
AI-powered legal technology that rapidly and accurately answers questions on local legislation and case law can help corporate counsel to more readily find solutions to complex business problems.
“Lawyers spend a lot of energy concerned about how they’re going to get an answer in time for their clients in a way that is going to be pleasing or delightful to their clients,” commented Roderick Smith, Senior Legal Counsel at Novartis Pharmaceuticals, Australia and New Zealand. “I think [legal AI] has the potential to allow lawyers time and space to be people first, and that’s what our clients expect of us. Having access to this back-end technology has the potential to really help make us look amazing to our clients in a way we might have required from our panels of external firms.”
Tim Perry, Director of Practical Law Australia, agrees. “Having access to online knowhow and research platforms can help in-house counsel get to an answer on a legal point faster, which is enabling in a range of ways,” he said. “It gets to a simple ‘yes’ faster; it helps find a less simple ‘yes’ where need be, and it can help explain a ‘no’ with context and alternatives to enable the business to move on quickly.”
2. An imbalanced equation: Inadequate resources + increasing demands
Legal departments are under growing pressure to conduct more work in-house — to do more with less. Thomson Reuters research has found that 69% of general counsel worldwide are under moderate to significant cost pressure from business leaders. To address these demands, 72% of general counsel said that using technology to simplify workflows is a high priority. More than three-quarters (76%) expect AI to help their departments achieve the necessary operational efficiencies.
“We use legal technology for intake and triage, to streamline allocation of work across the department, to ensure that the right work is getting to the right people, to manage our SLAs with the business, and to more efficiently identify where we have resource constraints,” commented Janine Cane, Associate General Counsel at Thomson Reuters. "In our legal team we have improved efficiency by automating routine tasks and processes, reducing the legal team being perceived as a bottleneck and freeing up lawyer time to focus on more strategic and higher-value advice."
Cost-effective and reliable legal technology that incorporates AI can empower in-house counsel to work much better and faster. Legal tech’s wide-ranging capabilities include rapidly analysing thousands of contract clauses and redlining draft contracts against company policies.
“I think much of contractual analysis in transactions is repetitive and really doesn't require my input,” commented David Bannister, Senior Legal Counsel at Lendlease. “If something is inconsistent with the policy, I don’t need to make any decisions about that — it should just be reflected in the document by a machine that has reviewed it for me.”
Other benefits of legal AI include dramatically enhancing legal research and providing a 24/7 AI legal assistant. “For legal knowhow and research, an AI assistant is like search on steroids – if gets you to the answer faster,” said Perry.
3. Changing perceptions: From cost centre to value centre
So, how can legal departments that leverage legal tech move away from being perceived as cost centres and reposition themselves as valuable business partners? The first step is changing how in-house counsel see themselves and relate to their colleagues.
There are often substantial gaps between C-suite expectations and legal department priorities when it comes to measures of effectiveness. Thomson Reuters research identified big disparities in perceptions of the legal department’s prioritisation of quality of advice, employee engagement and growth enablement.
Some of these issues may be due to communication gaps. Influence in the C-suite boardroom involves combining technical excellence with solutions-oriented advice that is clear, concise and transparent. General counsel who excel at business communication focus on what really matters to senior decision makers: key data-driven actionables and takeaways, rather than the finer points of the law.
Business-savvy general counsel also regularly communicate the tangible value that their legal department delivers. “Legal technology helps us demonstrate our value to the business by providing data-driven reporting on the activities of the legal department,” noted Cane.
According to ACC research, 59% of CLOs report to their CEO, while 13% report to their CFO. These relationships and communication channels could be leveraged to enhance the legal department’s organisational standing. General counsel could also impress C-suite leaders by providing metrics-based reports on the legal department’s performance.
Legal AI can rapidly generate reports on, for example:
• the number of deals the legal department enabled;
• the quality of outcomes delivered;
• the number of risks mapped by the legal department; and
• the approximate cost of risks averted (including regulatory penalties).
In-house counsel often see themselves as simply lawyers. A change in mindset — where they see themselves as tech-powered lawyers and business leaders and act accordingly — can be transformative both individually and departmentally. General counsel who demonstrate that they are truly aligned with business needs will build more trust, influence and status.
"A legal team that is able to demonstrate understanding and passion for the business they support will more often be appreciated as a partner in helping to develop strategy and problem solve outside of purely legal issues,” said Cane. “Our legal skills can easily be deployed in that way and help to illustrate value.”
4. Freeing up time to think: Focusing on what really matters
Continued pressure to do more with less is leading many businesses to lose valuable CLOs to either burnout or competitors. A key benefit of AI-powered legal technology is that it can enable legal teams to work more effectively and help ensure much better work/life balance. This can, in turn, lead to productivity improvements, improved morale and better talent management.
Legal AI that rapidly and accurately fulfils labour-intensive tasks can enable corporate counsel to focus on higher-value work. This may include launching data-based analyses of internal processes and programmes to identify opportunities for cost savings and strategic growth. The technology could also empower corporate counsel to identify regulatory initiatives that create new business opportunities
“There is never time wasted in saving time,” said Smith at Novartis. “You can either double the amount of things you can get done in a day or, alternatively, you can be far smarter and more strategic about how you use your time in order to build your relationship with your business. This is what I think is really important for us to be focusing our efforts on as we come into the new AI-powered legal practice.”
For too long, general counsel have had to focus on internal firefighting or policing instead of fully engaging with the business. As such, their value remains under-appreciated: only 16% have a seat on their company’s board.
“Having a seat at the table in business meetings means one can often more easily foresee and head off potential problems and risks before they eventuate,” said Cane. “A leadership team will be far more appreciative of a crisis averted than addressed after the event.
By leveraging legal AI, general counsel can gain greater gravitas and prestige in C-suite boardrooms. An increasing number may even become CEOs in the coming years because of their unique combination of legal expertise, business savvy, strategic insights and leadership skills.
5. Staying still vs living the dream: Preparing for an AI-powered future
Forward-thinking corporate counsel recognise that professional growth means being willing to try something new and to redefine their roles in line with their ambitions. They know that their future depends on their ability to work more effectively, to be adaptable and to have a growth mindset.
“A growth mindset in the AI space encourages critical exploration and iterative learning,” said Perry. "It also recognises that the new AI tools are just that – tools that require human intelligence to get the most out of them."
In preparation for the important role that AI will play in future, an increasing number of Australian legal departments are adopting Legal AI from trusted legal solutions providers. Almost all (97%) of Australian legal departments that use AI have improved operational efficiency, according to ACC research. A similar amount (99%) expect AI to play an influential role in legal practice within the next five years.
Are you ready to take your next step into the future of legal practice? Contact us now to learn more.