Transform your legal operating model for the next normal
COVID-19 is causing unprecedented disruptions to business and supply chains of various enterprises. Many companies are looking to identify and mitigate the operational, economic, and legal risks related to this outbreak. The legal function has been under enormous pressure to cope with the current situation – from privacy issues surrounding employees testing positive for the virus, to dealing with contract breaches in the supply chain. The increased complexity and divergence of measures around the globe have exposed companies to additional legal, reputational and commercial risks. As hopes of a “return to normal” fade, general counsels and their teams need to re-evaluate how they can support the business in the “new normal”, identify the demands and opportunities they face, and put together the business case for change.
Doing more with less
While once again increased pressure and stretched resources pose constraints on the legal function, it becomes ever more important to rationalize and consolidate external spend, free up talent for higher-level work through alternative sourcing (or automation), and reducing cost/increasing efficiencies through the use of technology and process redesign.
Capture the lessons learned from the current pandemic so far and develop potential scenarios both for the short term and the long term readiness.
Reformulate your aspiration
Determine what your legal department needs to do to be a true business partner today and tomorrow based on the potential outcome scenarios.
Set KPIs and develop a road map
To the extent possible determine what needs to be done in the next couple of months and even in the next 1, 2, and 3 years, and how success will be measured.
How do you develop a new legal operating model?
Define the strategy:
- The legal strategy needs to align with the overall strategy of the organization and also bear in mind its risk appetite. It needs to be a tactical response to the revised expectations of stakeholders.
- Gain buy-in from senior stakeholders, as significant efforts can only be initiated once the GC has backing and the budget to take action.
Identify the behaviour:
- Assess what behaviours are needed to achieve the strategy, the changes required, and the key performance indicators (KPIs) that will measure whether the strategy’s objectives are being met.
- Define a strong governance structure, with clear role descriptions & responsibilities, and implement the proposed changes – make it reality.
- Perform a diagnostic test to identify which other components take priority in moving to the target operating model. An operating model which would help assessing operational performance (efficiency, effectiveness, and customer satisfaction). Also a very useful tool when planning any structural reorganization.
Implement and enable:
- Once defined, turn to the enablers: organization & people, process and technology & data.
- Use a robust approach to knowledge management: keep team members up to date, learn from external providers, use technology to track and report, and provide regulatory databases to capture lessons learned, improving efficiency and minimizing legal risk and cost.
- The “next normal” may see sustained higher levels of remote working – keep your workforce connected, provide the infrastructure and support they need, and address any performance-related issues.
Creating and managing a new legal operating model is not a quick task. Time, effort, and (external) advice is needed to review the appropriate sourcing models, procure the appropriate technology, determine the optimal legal team, and implement the new strategy. It may not be a quick task, but it most certainly is a necessary task to transform the legal function to operate in the “next normal”.
About the authors:
Hans Albers | Director Deloitte Legal
+31 6 3111 2604
Dominique Poot | Senior Manager Deloitte Legal
+31 6 5359 8604