Corporate Executives Want More From Their Legal Departments (2/3)

Corporate Executives Want More From Their Legal Departments

The next time you seethe with envy as your business colleagues or competitors prattle on about how wonderful and efficient their in-house legal departments are, you might want to take in that information with a grain of salt. While the status, security and convenience a company realizes by having their own on-site legal department may prevent scrambling around for a lawyer every time a legal issue arises, today's corporate executives are looking for much more when it comes to legal counsel. And, according to such executives across the nation, legal departments simply aren't living up to expectations.

With the ever-increasing demand for efficiency and quality in corporate America, it's only natural for corporate executives to want in-house counsel to contribute to their companies' strategic business plans and objectives. But according to the first-ever Corporate Legal Times - PeerPoint Technologies survey of chief executive officers and chief financial officers, there is a common thread of dissatisfaction when it comes to rating the effectiveness of such departments. For the survey, conducted in conjunction with the American Management Association, corporate executives were asked to critique their legal departments' business performance. According to the 114 executives surveyed, almost 20 percent gave a below average or failing grade. Among the results were the following "below average" grades:

18.5 percent reported a D or F grade to their ability to offer business and legal advice.
16.2 percent reported a D or F grade to their understanding of business objectives and strategic plans.
17.3 percent said they were dissatisfied with their legal department's contributions to corporate strategic planning and goals.

The consensus from executives is that their lawyers must think conceptually and contribute to the development of company strategies and initiatives. "Top executives want to see more collaborative communication and preventive counseling from their legal departments," says Jennifer E. King, managing editor of Corporate Legal Times (survey results are in the publication's February issue). "The best way a legal department can contribute to corporate strategic decision-making is to apply their counseling energies proactively rather than reactively. The bottom line is that CEOs and CFOs want in-house counsel to think like businesspeople."

When executives were asked to describe the best ways in-house counsel can contribute to corporate decision-making, the individual opinions varied. Overall, however, the business objectives were clear. Executives expect their legal departments to be able to:

Understand the business.
Identify issues and recommend alternatives and solutions.
Point out potential traps and suggest alternatives that have less potential risk.
Provide legal perspective to business issues and clear the way for contract negotiations.
Provide creative ways to solve business problems.

"As in-house counsel use decision-making initiatives consistently, the company will successfully meet its overall goals and objectives," says King. "These contributions will assist in determining trends and expected changes in legislation, as well as efforts to reduce short-term and long-term litigation liability."