It’s the role of a General Counsel to provide and promote an efficient and responsive legal service to their internal stakeholders. But if there are no clear performance metrics in place, there is no business case for continued investment in the legal function. What’s the best way to demonstrate your in-house team’s value to the business?

This was the theme of our latest General Counsel roundtable event, the third in our Legal Operations series. We were honoured to have Chris Fowler, Legal COO at Rio Tinto, share his insights both from his current role and his previous career, which includes nearly more than 20 years in various senior roles at BT.

For those running large institutional in-house legal teams, there were four broad areas of advice:

Alignment with the business is vital – as is influencing it.

The role of the legal team can often feel distant and it is essential that the Board is engaged. In most organisations, the Board sets the goals for the business that then flow down from the top. It is Legal’s job to challenge targets set by the business if there are aspects that lead to legal risk which the Board may not have considered.

While this is an important function of the team, especially where a business is going through a crisis or experiencing rapid change, the legal team should not just be seen as passive and can actually drive the Board’s agenda. For example, highlighting the new markets that can be entered as a result of competition and regulatory changes; or alerting them to a product risk that may materially affect the business but is not on the Board’s current agenda.

If you are in a regulated industry in particular, the GC needs to think beyond legal compliance and the social licence required for the business to operate in an increasingly ESG-driven world.

The General Counsel’s relationship with the CFO is particularly important.

The CFO holds a lot of power in an organisation. They have the oversight of the many spreadsheets within a business – and legal spend can be budgeted for across various departments. It is not just about the operating costs of the in-house legal team – there may be legal spend in other departments such as HR or Corporate Communications. As a GC it is important to know about all legal spend within an organisation in order to influence the areas that should be invested in.

As a GC it may be beneficial to hold quarterly touchpoint meetings with the CEO/CFO of each business unit to ensure that Legal’s input and influence is part of the strategy discussion, not just a passive recipient of it.

Many businesses budget for three-year strategic plans yet inevitably things have changed by the third year; in addition, planning in this way doesn’t drive a burning need for organisational change. Keeping a regular and open channel of communication to the CFO is needed for the GC to provide the most value and maintain influence.

Engaging your team and tracking their activity provides useful metrics.

If you don’t ask your team to record time, an activity tracker can both assess the number of matters spread across your team and can also help you track demand spikes in annual activity where additional cover may be needed. A red-amber-green alert system can also identify areas that your team are spending time on that they shouldn’t be.

It’s important to obtain regular qualitative feedback from the business. Ask stakeholders to score your team not just on the quality of legal advice they are providing, but also the speed of response and the difference it made.

Other metrics where the legal team can demonstrate its value—and not just be seen as a cost centre—include the sum of legal costs recovered in litigation or the financial risks avoided. Measuring the success of the legal function by the amount of reduction in external legal spend is a common metric. However, increased outbound referrals often means the business is doing well in terms of transaction activity so the additional spend is not only needed, but it is driving the business’ success. It is important to make the distinction between BAU vs non-BAU scenarios.

Reporting should be about the quality of the data, not the system you use. Tools already used by many businesses such as Excel, Power Platform and Power BI are great for reporting and manipulating data and are already understood and are in use by the rest of the business.

Storytelling is vital.

Telling the right story around a performance metric is critical to the way the message is received by your audience. For example, shortening the time taken to complete a transaction means that the sales team can actually do more deals; it is not just the metric itself, but how the GC can use it to drive business.

Demonstrating the power of the legal team to influence business strategy also aids recruitment of new talent – in a legal world where in-house salaries do not generally match the salaries paid in private practice.

Lawyers are trained to focus on detail, and it is important to keep the narrative on how the GC is supporting the business, engaging the team and adding value. Keep it responsive, proactive and simple.

In the absence of catastrophe and when all is going smoothly, you can look at what competitors are going through and tell the story of how your business has avoided disaster because of the systems and processes in place.

The topic of measuring team performance is important to our General Counsel community as they look to run their teams more efficiently and in a way that is able to proactively help drive the business forward – and important to us at Marsden as an area in which we can add value by bringing senior GCs together to network and share their experiences.

Thank you to Melius’ Lucy Powell who moderated the event, which was organised by Amanda Chard and Sarita Rai of Marsden. For more about how our in-house team can support your business please contact us.