The pressure on GCs is evolving legal service provision

Big business is more operationally focused than ever. Organizations looking to slash operational budgets is nothing new, but the pandemic certainly exacerbated this trend towards seeking efficiencies in service delivery. Legal – as a business unit – is no exception. GCs are looking to reduce the burden of resource-heavy, low-value tasks on their legal teams, while operating in an increasingly complex regulatory and business environment.

GCs are operating in an increasingly complex world amid demands to cut costs and deliver higher standards.

Many teams are tied up in lower-value activities that need to be done but can result in frustration and burn-out. Often the issue is the same: The team is too small for the workload and prioritizing is complicated, resulting in not having the time to focus on the broader vision and become a true business partner.

The changing face of legal service providers

The use of alternatives to law firms, such as “alternative legal service providers”, has been increasing in line with the pressure for organizations to outsource. Their attractiveness is clear: They often offer flexible pricing, which means organizations can control their budgets more effectively.

When you consider the legal practices of the Big Four, the benefits go far beyond cost savings. They provide access to a wide range of professional expertise, delivered in a multi-disciplinary way, which would be difficult for GCs to obtain in-house or procure from the traditional legal services market. GCs can be supported by experts to help them re-imagine their legal function, while also being provided with cost-effective support for lower-value work. They can also rely on these providers to answer the peaks and troughs in their resource demands without having to manage headcount issues. Combined, this support enables the GC to focus on strategic matters, regulatory change, and business partnership.

The evolution of the GC’s role, combined with a greater acceptance of alternatives to law firms, highlights a shift in the procurement of legal services generally.

More options than ever

The rise of multi-disciplinary service providers means GCs have more options than ever. This is clearly a positive development – freeing-up resources and allowing them to become more strategic in their role within their wider organization. The demand for a comprehensive, business-integrated legal service needn’t negate the role of the traditional law firm either. But the GC must question whether they are getting the right level of value.
 

A truly multi-disciplinary service provider will be made up of personnel with diverse business and professional backgrounds, which means they provide more than technical excellence. They are business-aware and able to respond in a more solutions-focused way, using technology developed in adjacent services for similar purposes. That’s not to say that the larger, traditional law-firms don’t have a place in this market, but more to recognize that GCs require both specialist legal advice and legal solutions to create efficiencies day-to-day.

The set-up of traditional law firms will likely change to meet both needs. Whoever envisions the change - and drives it - will be the winner in this market.

Maximizing the opportunity

A GC looking to take advantage of this shift in legal service provision, while prioritizing their general workload and strategically positioning their legal team, should look to understand the model of support that is best for their organization.

Historically, the only option was to increase the size of the in-house team or get a law firm to provide support. Today, the GC has many more options and building a strong relationship with a provider that can give holistic and flexible support - taking into consideration the complexities of the business’s operating model - is an opportunity that should not be missed.

The key to finding the right provider is about partnering with someone who will take the time to understand the business and how the legal department interacts with other areas of the business. GCs should be open to exploring new options for outsourcing their legal requirements. This could be through casting their net beyond traditional law firms, discussing their needs more effectively with their current supplier, or through finding new connections through professional service providers to different parts of their organization.

One thing is for sure though: The role of the GC is evolving to keep pace with the external pressures facing their organizations.

Author: Sibilla Ricciardi, Partner, Deloitte Legal Italy