Part of the Fabric: How an Internal Law Department Can Add the Most Value To a Company

by JD Supra Perspectives
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In-house counsel needs to enhance the ability of the company to safely pursue favorable transactions, not stand in the way...

The value provided by the in-house general counsel for all companies, and also by the associate, assistant and senior counsels for larger companies, is the provision of proactive legal services, as opposed to reactive legal services. If in-house counsel members become part of the fabric of the company, rather than a resource to be accessed when thought absolutely necessary, the members of the internal legal department can fulfill a proactive and preventive role, rather than simply reacting to legal crises as they occur. They can also think and act more like a business person, which also adds value.

Just how does in-house counsel become a part of the fabric of a company and how are proactive legal services delivered by internal lawyers who think like business people?

Become Immersed in the Business of the Company

The in-house counsel needs to become totally immersed in the business of the company.  When hired, in-house counsel should take tours of company facilities and learn as much as possible about how the company runs. As new operations are commenced, existing in-house counsel should also become familiar with them.

A newly hired general counsel should initially meet with all company leaders and department heads to get to know his or her new clients. Likewise, lower level in-house counsel should meet with those in the company who will need his or her legal services. From these meetings the counsel should become familiar with the company’s existing, past and potential legal issues and the company’s day to day need for legal services. In addition, the in-house lawyer will gain a knowledge of what is truly important from a business standpoint and the risk tolerance of internal clients.

Participate as a Member of the Senior Leadership Team

The general counsel needs to be a member of the senior leadership team, a member of important company committees and for smaller companies, a regular attender of departmental staff meetings. For larger legal departments, those who report up the line to the general counsel (deputy, associate, assistant and senior counsels) should be attending departmental staff meetings in their areas of expertise or responsibilities. Although pure legal issues will usually occupy only a small portion of the time in those meetings, it is necessary for the in-house counsel to attend those meetings, not only to become familiar with the company’s business and operations, but also to enable the in-house counsel to identify potential legal issues before they become critical issues of potential liability.

The familiarity of in-house counsel with the company’s operations, its important personnel and its existing, past and potential legal issues, brings the in-house counsel to the point of becoming a valuable, proactive member of the company team. The internal legal team will then be put in the best position to fulfill its ultimate role of protecting the company’s assets and helping to increase the return on those assets. Too much lawyer and too little businessperson may protect the existing assets, but will not contribute to increasing their value or the return on their value.  

Identify Potential Legal Pitfalls Early On

The early identification of potential legal pitfalls and suggesting practical alternative legal paths, if necessary, can enhance the ability to efficiently and effectively accomplish the company’s goals without creating unnecessary legal risks. This is true with regard to proposed transactions, questions on operational entities, dealing with problematic claims or personnel decisions, and a wide array of other matters. The in-house counsel needs to enhance the ability of the company to safely pursue favorable transactions, not stand in the way.

Know the Business Plan

Familiarity with the company’s business plan also enhances the ability of in-house counsel to deliver services. The legal department can craft its own legal plan to deliver the services to support the business plan. The anticipated issues can be aligned with the manner of delivery.  On-going legal service needs will be ideally handled internally, with more specialized services being provided by outside counsel.  

Plan for Internal and External Counsel

Effectively meeting the company’s need for legal services will involve planning for the use of both internal and external counsel. A legal budget can also be prepared in order to bring about more certainty with regard to the company’s internal and external legal expenses. In-house attorneys can be employed, and panels of outside counsel can be put in place, along with negotiated discounted rates and agreed upon practices and procedures. Not only is directly providing legal services important for internal counsel, but effectively managing outside counsel is also a vital role, which frees members of the non-legal corporate leadership team from the need to spend the time doing so.

If the company’s internal legal team is functioning properly, it should be looked upon as adding substantial value to the company as a strategic business partner...

Add Value

A good General Counsel and his or her team add value to a company. If the company’s internal legal team is functioning properly, it should be looked upon as adding substantial value to the company as a strategic business partner. This value is enhanced as the members of the internal legal team become intimately familiar with the company’s operations, its personnel and their risk tolerances, its legal issues and its need for legal services.

As the company changes its priorities, an informed internal counsel is in a position to take needed legal actions and to change the legal plan as necessary. As companies engage in large transactions which change the nature of the business, whether it be the purchase of another company, or the execution of an important contract, an involved and informed general counsel can think strategically and proactively to facilitate and respond to the priority changes. The informed in-house counsel becomes aware of the risks involved and of the risk tolerances of the business leaders and is prepared to take appropriate action to protect the company’s assets, while steering a proposed transaction along the right legal path.

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A legal counsel who is close to his or her internal clients, and knows the business operations and its future plans, can make sure that important transactions move forward efficiently and effectively, anticipate legal issues that may arise and deal with them up-front, enhance the corporate compliance program, and promptly avoid or deal with problem claims as they arise,

Any company thinking of adding the internal legal function, or wanting to improve an existing internal legal function should keep these principles in mind.

[Walt Metz serves as Associate General Counsel in Merchandising, Marketing and Supply Chain at Walmart Legal. Previously, Walt has served several other companies as in-house counsel, including five years as the General Counsel for Americold Realty Trust/Americold Logistics. This article reflects his personal views and is not intended to necessarily reflect the views of any of his current or past employers. His LinkedIn profile can be accessed here. His other articles published by JD Supra can be accessed here.

JD Supra's In-House Perspective series provides in-house counsel a platform upon which to share their views and thought leadership on issues of the day, including industry news and legal developments, relationships with outside counsel, and law practice matters.]
 

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