Strategic planning: survive and thrive in the new normal

Mick Sheehy, Partner at PwC NewLaw and regional leader of CLOC Australia, shares his insights on strategic planning. The views in this article are the author's own, and do not represent the views of Juro nor those of CLOC.

Why legal operations exists

The context that gave rise to legal operations is still worth remembering. I imagine many of us remember where we were when we saw the employees of Lehman Brothers start to spill out onto the street with their belongings in cardboard boxes.

The ‘more with less’ environment that followed for in-house lawyers perhaps didn’t arrive in such a single, iconic moment, but before long it was a fact of life that we all had to reckon with. As a rule, legal budgets had increased year on year before then; when we were asked to deliver more results with fewer resources, the only two levers we knew how to pull were either to spend less on external advisers, or to cut our internal spend.

After a few years of managing with tighter budgets, hoping that things would go ‘back to normal’, the realisation that they never would made us focus on internal productivity and innovation in a way we hadn’t been forced to do before. As the GC at Telstra leading innovation a key response was putting in place a programmatic workstream specifically to tackle productivity and innovation. Hiring a legal operations senior executive was also a critical instrument of change.

If we are to do more with less, there’s a danger that as a consequence the future of our legal departments is only a smaller and less relevant one

The strategic framework

The pressure on budgets was one of the key drivers for us to embrace strategic planning as a key competency for legal. Having a time horizon that stretches beyond the next annual budget approval wasn’t a widespread attitude amongst in-house lawyers. Engaging properly with the 3-year and 5-year timelines of the corporate you support is a good start - but it’s limiting. If lawyers are really to plan strategically, and add value to the business, then the edge of our ambition shouldn’t be managing to a simple deadline.

With that in mind, we set out a framework for strategic planning to overcome short-term thinking. It starts with two questions:

1. What is the strategy of the company, and how well do we need to manage and align to it?

For the most part, in-house lawyers do this well - we have a solid understanding of where the business wants to go and we endeavour to align to that. Where lawyers have perhaps fallen down is the second question:

2. What is the strategy of the legal department?

This breaks down into three pillars:

How will I deliver more with less?

This means increasing productivity through innovation to deliver today’s service more effectively and efficiently tomorrow. This might mean process re-engineering, data analytics, automation, or any of the other innovations that can improve legal operations. This is where I spend the bulk of my time.

Where is the company going, and what kind of legal needs will it have in the future?

This is particularly important for a technology company like Telstra, because the technology it uses, develops or sells will evolve, and the law will evolve too to keep pace. We have to make sure we have the skills and the capacity to learn, understand and deliver on those future requirements.

What new value could the in-house department be delivering tomorrow that it isn’t today?

For many legal departments, this is the hardest question to answer - but it’s also one of the most important. If we are to do more with less, there’s a danger that as a consequence the future of our legal departments is only a smaller and less relevant one. Are we empowered and incentivised to find areas of value that could be added to the company in the future? The resultant drive to improve processes might mean legal straying into territory traditionally reserved for other teams - such as sales or procurement - which means a collaborative, strategic approach is key.

Delivering against these pillars requires different types of talent. The first requires up-to-date business acumen; the second one requires forward-thinking lawyers, who can use horizon-scanning to spot future needs; and the third requires commercial thinking lawyers ready to push legal into traditionally non-legal areas. Working out who can fill these roles in your in-house team is a key challenge in strategic planning.

Being persistent and accumulating results allowed us to convince our colleagues that we were one of the company’s leading and most innovative departments

Results your CEO can’t ignore

We set up the Telstra legal innovation forum to explore these issues, and to share the learnings our legal operations function gathered with the wider business. The forum was a series of workshops focused on problem-solving: we enlisted our junior lawyers and used design thinking to address key basic problems we encountered in our working lives as lawyers. These problems might be related to technology, but often they were about achieving cultural change.

In the first year of these workshops, we eliminated 40,000 hours of low-value, non-strategic work.

This was a big win, and a validation for our approach; but what was interesting was that when we tried to attack problems in the same way the following year, the purpose of our innovation forum began to change. What had started as a problem-solving forum had evolved into a workstream that trained our lawyers in how to be more objective about what they did, and to develop an innovative mindset. This meant that when they went back into their areas of the business, they’d make operational changes to their processes, and create incremental change for the business as a whole.

This helped us get to the long-term thinking that is often difficult for legal to achieve. The forum started to deliver an accumulation of small wins, that drove a material impact over the longer term. Being persistent and accumulating results allowed us to make important gains, and even win some awards; but even more precious was our ability to convince our colleagues that we were one of the company’s leading and most innovative departments. The CEO and the board suddenly took notice of what we did and how we did it; they asked for presentations from us, and the rest of the organisation started to follow innovation in legal closely, looking for lessons they could learn from and take back to their teams.

Making it happen - and enjoying the benefits

In a ‘more with less’ environment it’s really easy to focus narrowly on productivity. But there’s an obvious question after saving 40,000 hours: what did you do with them? Simply taking them out of the business as headcount reduction would have been a mistake and a terrible disincentive. But instead, by proving our ability to add value, and gaining champions at board level, we had the freedom to take that time and use it wisely: to give a better work/life balance to our team, and to reinvest it in more innovation. Looking beyond the hours/dollars saved metrics, it’s also worth tracking more profound metrics, like legal ROI, value created or risk avoided. They’re harder to measure but great indicators as to your direction of travel.

Making a success of strategic planning is achievable in any in-house legal department, regardless of its size. A senior executive once told me that if we were serious about change we needed someone who, when they turned up to work, had only one job: to make that change happen. Now that’s easy to say, as a GC in a legal department of 230 lawyers, with the ability to hire a full-time legal operations executive. But in a much smaller team, it’s still possible to achieve change, if you work out how to make sure the agenda isn’t a nice-to-have, or something additional to do alongside your ‘real work’.

Some lawyers will be reluctant to embrace it, and look at strategic planning and legal operations as beyond the scope of what they feel they are there to do. You can overcome this resistance in many ways; an ‘innovation goal’ as part of an individual’s personal KPIs, tied to salary and bonus, is one obvious and effective method. But in my experience, never underestimate the importance of celebrating even small wins. Elevating colleagues and creating excitement is one of the cheapest currencies you have - spend it regularly and you can create the momentum to change your approach to strategic planning, and deliver real value to your business. In a permanent ‘more for less’ environment, that might be too big an opportunity to pass up.