When is a legal department ready to transform?

Question: How do I know when my legal department is ready to transform?

Answer: Two characteristics typify legal departments that are ready to successfully transform: they have a motive, and they recognize an opportunity.

Why do we use a construct more common to criminal law—motive & opportunity—to address an issue of business processes (and in legal departments, no less)? To be sure, legal departments are not in the business of committing crimes. But the motive/opportunity construct is nevertheless instructive because the act being considered—in one instance, by a would-be perpetrator, and in the other by the legal department considering a fundamental transformation in how it operates— is essentially transgressive. In each case, established norms of behavior and conduct will be breached. Taking such a step requires clarity of intent, and an opportunity to carry out that intent.

Motive: Legal teams that are ready to transform have a reason to do so. That reason, moreover, is typically clear, compelling, and urgent. Think of the law of inertia: objects in motion tend to stay in motion; objects at rest tend to stay at rest. Organizations act similarly: those that are dynamic, forward-thinking, and agile have momentum and act accordingly. Those that tend towards stasis, however, are the opposite. Organizational dynamics thus can mirror the physical law of inertia. And, just as there must be a force in physics that overcomes an object’s inertia (either causing it to begin moving, when it was at rest, or to stop moving, if it was in motion), there must be a force at work in the dynamics of an organization—and legal departments are no exception—that causes it to act differently than it did before. For human organizations, that force is motivation.

The motivation for a legal department to change can come from many sources, but common elements we see are changes in the needs of a business (the legal department’s client), or among the people providing that business with legal services. Thus, for instance, the needs of the business likely will change in the midst of a strategic transaction, when a new unit or business line must be integrated, or divested. The needs of a business also change when regulators, the board, (activist) shareholders, or adverse parties become more assertive and pressure the organization in one way or another. Similarly, when the composition of the legal team changes, or those who utilize and rely on the legal team change, that also often creates a motivation to evolve. A new GC may institute changes in the course of executing a new vision and mandate. A new head of legal operations may bring a novel methodology or create a different view of what is possible. A new CEO or CFO may press updated priorities on the legal team. Or a group of thoughtful, forward-thinking attorneys and staff may coalesce, simply wanting to find innovative and better ways of working. Each is a form of motivation. Each can drive change. When more than one of these dynamics is present, the impetus to change becomes even stronger. Inertia is no match.

Opportunity: A motive is necessary, but combining it with opportunity is key. Standing alone, neither motive nor opportunity is sufficient to transform a legal department.

Opportunity comes in many forms, but ultimately it boils down to circumstances and conditions that offer a reasonable possibility that actions instigated by the motive will succeed. Opportunities to transform legal functions can be multifaceted, including elements such as:

• Internal support for change (for instance from the GC and other legal team leaders)
• External support for change (such as from the CEO, CFO, Audit Committee, or others)
• New circumstances that necessitate change (e.g., a transaction, a new market opportunity or risk, a new technology or process innovation)
• Timing (change happens faster, and more effectively, if it is under a deadline).

In essence, these factors create an impetus for change, and provide permission to undertake it.

So, the answer to the readiness question is this: legal departments that identify and agree on a motive to change, and then are alert for opportunities to act, are legal departments that are ready to transform.