Practical Law Company & Lighthouse Global How can lawyers be more commercial?

Date: 29 November 2011

Lighthouse Global

Results from our workshop Big performance gaps

Importance to the company
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Performance of external law firm

Who we spoke to GCs and business directors from large international companies

Macrotrends altering the risk landscape Driving the need for more commercially-minded lawyers
Globalisation Digital economy Supply chain complexity Economic volatility

Global trends

New regulatory landscape

More assertive enforcement of contractual rights

Government and business response

Lack of clarity on legal position

Greater focus on company widecompliance

Heightened risk sensitivity

Risk implications

Need for more commercial lawyers

Sourced from Lighthouse research including; ACCA Where next for the Global Economy; PwC CEO study; KPMG Cutting through Complexity; DLA Piper Shifting Landscapes

Outcome
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Finance evolved into 4 distinctive roles Legal following suit

Finance CFO board-level, investor relations Legal GC Commercial adviser

Tax specialists, treasury Technician Assurance Compliance Book-keeping and management reporting (often off-shoring) Process

Technical experts eg IP,

Legal hybrids; risk management; internal comms

Basic contractual documentation / due diligence (often off-shoring)

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Commerciality remains a weakness Due to deep-seated attitudes and ways of thinking

Lawyers Risk not Legal not Words not Sceptical not Pessimistic Best deal Positional Legitimacy

Business Opportunity Financial Numbers Realistic not Optimistic not Quickest deal not Co-operative not Pragmatism
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A worked example Commercial contracts

Understand -ing the drivers Drafting the contract Changing behaviours Resolving disputes

Negotiating

Communica ting the terms and obligations

Monitoring compliance & performance

There is a huge opportunity for the legal team to look after the contract all the way through from conception to implementation. Nobody owns the post-deal management. The lawyers are missing a trick here because they could own the whole contract and become the trusted advisor.
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Showing firm-wide compliance New educational role for lawyers

Understand-ing the drivers Drafting the contract Changing behaviours Resolving disputes

Negotiating

Communicating the terms and obligations

Monitoring compliance & performance

Under US sentencing guidelines, if a company has a program to prevent bribery the sentence is reduced because the company is taking steps through having a program of education to stop it.
Donald Hamilton, Managing Director, CMI Concord

The future hybrid lawyers

My job is probably 70% legal advice and 30% business. ...You see business projects that have legal aspects. They are very rarely just legal and thats why I think you need people who can give value.

There are opportunities in building a wider, commercial role But also challenges

Opportunities
Better outcome for the client? More interesting role Tangible differentiator (for procurement) Cross-selling opportunities Trusted adviser role

Challenges

Potential liability?

New skills required Competing with inhouse legal Lower margin than traditional legal advice?

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