Contracting Mistakes #4
Posted on Oct 13, 2020Every week we talk to in-house legal teams who are being run ragged meeting business demands, finding change to be hard, while facing cost and headcount pressures.
We also know other teams that are spending their time on what matters, with a contracting process that flies and with a business happy to pay.
Often what’s stopping teams from getting to this promised land are some simple, understandable, and fixable mistakes. This is the fourth of a series covering seven common mistakes that we keep seeing. You can see the others here.
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#4: One More Lawyer
“Vices are sometimes virtues only carried to excess” - Charles Dickens
Paul Gilbert, who knows more than his fair share of legal teams, once told me that whenever he asks a GC what their ideal team size would be, he is almost inevitably told “just one more lawyer”. Expanding the team does seem to be a common solution to increasing demand, but should it be quite so consistently the go-to answer?
The road to improving your contracting process requires standardisation and automation. One of the side effects of this is a significant jump in productivity. So a question to consider before immediately reaching to hire another lawyer is have you put the basics in place to ensure that your current team is operating effectively?
To give you some sense of the gains available, based on what legal teams report to us as the number of contracts their team members typically handle, we’ve found that at least 2-3 times more can be done on average without breaking a sweat. This is not a matter of heroics - it’s just the amount of time needed can be significantly reduced if you change the way the work is done.
If you do hire that extra lawyer instead of making improvements, the incentive for productivity improvement evaporates, at least for the moment. It also causes other issues:
- You will continue to rely on more manual processes that are inevitably slower.
- Supporting your contracts will be significantly more expensive than it needs to be. There are cheaper options than just relying on the labour arbitrage play of hiring internal lawyers.
- Solutions that only involve internal team members (and possibly long-term bodyshop support) are far less flexible and capable of handling spikes in volumes than can be provided by incorporating other types of suppliers into the mix.
- It exacerbates the dead-man’s-shoes progression problem faced by many in-house lawyers, which increases turn-over and hiring costs.
- Limits on headcount are the new normal, not just a function of the current freeze, and there may be better ways to optimise the skills mix in your team rather than devoting all the slots to contracts lawyers.
We are seeing a different model being adopted by progressive GCs, with an emphasis on using in-house lawyers for the more strategic, complex and sexy deals, but using managed legal service providers to support the day-to-day high volume deals and law firms to support the particularly complex large deals requiring specialist help:
A more flexible, cost-effective and strategic approach is quite possible... if the one-more-lawyer habit can be kicked.
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We are running regular free webinars to discuss the key principles that underpin transforming contracting processes (along with the mistakes to be avoided).
You can also read the other posts in this series:
#1: Accepting no time for the "important, not urgent"
