A decade ago, life as a blue-chip general counsel was a bit of a sinecure, once you had climbed the ladder in the first place, of course. A competent GC was well rewarded, but was spared the killing working hours of private practice. Privy to the business’s (and perhaps the chief executive’s) most sensitive secrets, they were almost immune from dismissal and able to meet any threat to their department’s budget with unchallengeable warnings of dire consequences.
If that slight caricature was ever reality, it certainly is not now, says Bob Gogel, chief executive at legal outsourcing specialist Integreon. “Over the past decade and especially the last three to four years, GCs have come under incredible and increasing pressure to manage legal costs in a way like they never had to before,” he says. “This squeeze on budgets coincides with growing, new legal requirements, especially in compliance and regulation.
“The executive team and board are looking to the GC to play a more proactive role in helping them shape company strategy, and achieve corporate objectives while managing risk.”
Meanwhile, the GC’s role is expanding from legal adviser to include being a business adviser. The job title has, in many cases, also changed from GC to chief legal officer, on par with the chief financial officer. As an example, Mr Gogel cites the role of his own GC, Mike Zuercher, “my right-hand guy” on Integreon’s senior management team.
According to Global Legal Post in this year’s General Counsel Excellence Report and Law Department Survey, the two headline concerns for GCs are threats from regulators, and how best to manage departments to create value, maximise services and keep a lid on costs.
The obvious response is to pass the cost-cutting on to their panel of law firms. For most GCs, the world of cosy country-club relationships, behind which firms were virtually dictating terms to their clients, is long gone. However, the much talked-about death of hourly billing is not enough. For a start, says Mr Gogel, in the corporate world, this debate was always a distraction.
“I’ve never seen a legal bill that doesn’t get negotiated anyway,” he says. In reality, the hourly rate is generally a convenient way of drawing up an estimate. “If the client thinks they got great value, they’ll pay. If they don’t think that, they’ll negotiate further.”
GCs everywhere are looking for better approaches to how they manage disputes, such as having a more efficient means of ensuring litigation readiness. This may include active programmes for information governance, which is all about knowing your data, controlling your data and appropriately disposing of it. GCs are also seeking alternatives to the traditional litigation process, such as through arbitration or otherwise settling cases out of court, where it makes sense to do so.
In this new world, smarter executive boards are taking a more fundamental look at how they run their legal teams. One example is insurance giant AIG, which has spun off its legal department as a separate profit centre to sell its expertise in buying legal services to its clients.
Another is global software leader Microsoft, which has embraced outsourcing in partnership with Integreon.
Mr Gogel stresses that outsourcing today means a lot more than shipping back-office tasks to lower-cost locations. The place to start is to look at what he calls “routine, high-value, rules-based” work, for example managing the consistency in non-disclosure agreements.
When we take on work in support of litigation or law department operations, clients know we will deliver
While the market for offshore services continues to grow, this may not be the best fit for everyone. There are strong parallel trends for near-shore, onshore and even on-site outsourcing too. “Ultimately it is about having the right resources in the right locations doing all the right things,” says Mr Gogel.
Although in principle a decision to outsource is really no different than the process of retaining a law firm, he says the cultural change involved may take some time. “Many organisations take two or three years to get used to outsourcing, then more time to get used to the idea that it could go offshore. It’s a learning process for everyone,” he says.
Picking the right partner is crucial and the choice should not be dictated by price alone. Mr Gogel says in some cases the quest for lower costs has already gone too far. “There’s probably too big a focus on unit cost rather than value for money,” he says. “Outcomes do matter and client satisfaction is highest with this type of focus.”
Integreon describes itself as a legal process outsourcer. “We don’t practise law. When we take on work in support of litigation or law department operations, clients know we will deliver,” says Mr Gogel.
Law firms themselves are going down a similar road, focusing their in-house resources on providing higher-value work. Non-core tasks, such as document review, are increasingly being outsourced to providers such as Integreon.
There will be increasing use of technology, from contract management systems to matter management and project management all the way up eventually to artificial intelligence. “What we’ll see is a whole generation of lawyers who will be much more tech savvy,” he says. But many practical solutions to the GC’s challenges are out there already and many of these can be embraced in incremental steps.
Is there a future for the GC role itself? Mr Gogel has no doubt about that and believes the role will gain in importance. “Theoretically, you could outsource everything, but you will still need someone on staff to be the orchestra conductor,” he says.
Successful businesses will still need a GC. But don’t expect the role to be a sinecure.