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Handling high-stakes cases that have a huge impact enterprise-wide, the in-house legal department is undeniably an integral part of the organization. And, given their relatively small size, one that punches above their weight. But historically, legal leaders have struggled to shift the perception of the legal department as a cost center. Legal matters are an inherently expensive part of business operations, but the core view of the legal function does not need to revolve around cost. It’s time for the conversation to move to the value the department delivers.

Siloed by traditional corporate culture, it can be challenging for General Counsel (GC) to demonstrate their team’s performance and communicate their impact. But now their function is being reimagined to operate as a data-driven, proactive company defender, requiring them to adopt a business mindset. This cultural reboot offers an opportunity for legal professionals to actively highlight their impact, shift outdated perceptions and demonstrate how they protect the business.

 

What does a legal department do and how is that changing?

Anecdotal evidence and formal studies tell us that legal departments are under pressure. Workloads are getting heavier. And their area of responsibility continues to broaden.

According to the 2024 ACC Chief Legal Officers Survey, which surveyed 669 Chief Legal Officers (CLOs) across 20 industries and 31 countries, 59% of respondents said their workload increased over the past year. The majority of CLOs were overseeing at least three additional corporate functions, such as areas like compliance, ethics, privacy and risk. Most CLOs reported having responsibility for helping to lead their company’s environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) strategies.

As their roles and responsibilities have evolved, in-house legal teams have innovated. New roles like Chief Legal Officer, Deputy General Counsel and Legal Operations Manager now lead these evolving functions, adapting the changing needs of modern organizations.

Corporate legal teams reimagined: 6 core in-house legal department functions

1. Contract management

Contracts are the bread and butter of a legal department’s day-to-day workload. They exist at every level of an organization — internally, such as employment contracts, and externally with suppliers and clients. They’re often processed in high quantities and require the attention of multiple departments.

The in-house legal department is also responsible for ensuring every contract is compliant with ever-changing laws and regulations. Small mistakes can result in significant consequences – financial, legal or reputational.

Contracts keep companies moving, both operationally and financially, minimizing exposure to costly risks.

2. Risk reduction

Identifying potential risks is just the initial step in risk reduction. The approach taken by in-house lawyers needs align with the risk appetite of the business: how much risk is the organization willing to take on? One with a higher risk appetite may chase bold growth opportunities despite higher levels of uncertainty. Whereas another, valuing stability, might be willing to sacrifice some growth for a safer path.

Different business sectors also face industry-specific risks. Where a counsel for a construction company has to handle risks related to land use permissions, their non-profit counterpart must ensure the security of donor and beneficiary data.

Understanding an organization’s risk appetite allows in-house counsel to gain clarity on how much risk is acceptable and where to draw the line. Legal teams can then assess, prioritize and reduce where necessary, striking a careful balance between potential threats and promising opportunities.

3. Intellectual property protection

Intellectual property (IP) in the form of patents, copyright and trademarks allow a business to earn recognition and financial gain from what it invented, created or developed. A corporate legal department helps organizations protect their intangible assets, while harnessing and exploiting the value of their IP.

Whether an organization needs to licence IP to a third party, monitor competitors, file a trademark application or manage cybersecurity, General Counsel are becoming increasingly involved in this critical area of business operations. They empower companies to maximize the potential of their IP portfolios, fitting into their overall business strategy and keeping these assets as powerful tools for competitive advantage.

4. Litigation

Traditionally, the role of in-house legal teams as the company’s first line of defense in litigation was more reactive…they’d get involved after a dispute escalated.

Today’s in-house counsel are expected to be proactive and implement strategies to anticipate and prevent potential litigation. They’re also involved in decisions about alternative dispute resolution such as mediation or arbitration to avoid costly court proceedings.

Compliance audits, advising on dispute resolution strategies and delivering training to other departments are just some of the ways modern in-house legal departments reduce the risk of costly disputes.

5. Employment law and labour issues

Often public, employment law disputes can affect an organization’s finances, brand and reputation. Working closely with the HR team, in-house counsel must proactively identify and mitigate potential risks, determining problem areas and taking steps to avoid problems down the line. Key areas include workplace safety, employee rights and termination.

Corporate legal departments now regularly review employment contracts, non-compete agreements and termination documents as well as navigate complex laws across jurisdictions for larger organizations. Teams are also called upon to conduct audits of employment practices and offer strategic advice for dispute avoidance or resolution.

6. Organizational and reputational management

Increasing regulatory pressures and social expectations mean General Counsel (GC) today face heightened organizational and reputational risks. As information travels faster through more channels, demands for corporate transparency are getting louder. Increasingly, C-suites are measuring success in terms of how actions and outcomes are perceived by major stakeholders and the wider public.

Geri Ann S. Baptista, a Vice President in a global strategic communications firm with 84 offices in 46 countries, said: “More law firms and in-house legal teams are partnering with public relations professionals as PR risk, along with legal risk, is factored into every major corporate action and reaction.”

Now more than ever, a company’s success in managing public opinion depends on a unified strategy that combines the strengths of legal and communications. Legal support is critical for companies devising clear, consistent crises response plans, which will allow legal directors and business leaders to take a structured and transparent approach when incidents occur.

Why legal departments must take ownership of demonstrating their value

General Counsel should not rely on their value being recognized spontaneously. How do you measure the value of a crisis averted? A well-drafted contract that minimizes future disputes? In-house legal teams need to take demonstrating their impact into their own hands.

Traditionally, legal departments were reactive, handling issues as they arose. However, today’s business landscape demands more. In-house counsel are expected to add strategic value and support organizational growth. Over a third of CLOs in the 2024 ACC Chief Legal Officers Survey believe their CEOs want them to sharpen their business acumen and industry knowledge. Additionally, more than 20 percent think their CEOs expect them to improve their financial skills. Meanwhile, business acumen, communication and executive presence are the top three skills that CLOs are seeking to develop for team members.

To understand future trends for these teams, KPMG consulted experts from their Legal Operations Transformation Services. A key forecast: in-house counsel will be assessed based on the value they generate. The experts predicted a legal team’s value would be established by assessing how well they protected the organization’s interests, whether by ensuring compliance with corporate law or avoiding litigation. This will go alongside tracking the revenue legal services drive. For instance, by protecting the company’s IP rights, the legal team can prevent revenue loss from infringement.

Sizing up success

The legal profession is undergoing a data-driven transformation. Brought on by the rise of legal technology, in-house counsel are beginning to focus on numbers and metrics to show their value. Data analytics enable legal operations professionals to analyze swathes of information, extract actionable insights and improve decision-making.

Thomson Reuters, in their three-part guide for legal departments to demonstrate their true value, emphasised: “The language of business is numbers, so smart in-house lawyers must speak that language fluently.”

A legal department must create strategic key performance indicators (KPIs) that effectively showcase its impact. For example, totalling the fines, penalties, damages and settlements paid by a company over a given period. A high quantum may indicate that legal professionals may be too conservative in their approach.

Beyond the numbers

Metrics provide a valuable snapshot but they do not tell the whole story. Alongside determining the quantum, an in-house legal team may also need to understand the root cause — whether it is their department, other business units or external factors. Were outdated contracts not revised to reflect changes in laws or requirements? Was published marketing misleading? Did a sudden change in government regulations put the company out of compliance without time to adapt? These factors are not easily captured in numerical data, yet they are equally important.

Some of the legal department’s most valuable benefits are hard to measure – building brand reputation, stronger business partnerships, stakeholder trust and proactive crisis management to name a few. Client feedback and surveys can offer insight into many of these benefits. This helps the legal team know where to focus, prioritize, improve and drive their impact.

Telling the story

As legal teams are pushed to do more with less, justifying resources and demonstrating impact on the company’s bottom line is particularly important. Investment in technology and an increasing availability of data puts corporate legal teams in a position to capture and analyze data more effectively. In turn, this allows legal professionals to communicate their success and value to the wider organization, utilizing reporting and data to visualize key information.

To communicate their value, legal departments should ensure data collection is comprehensive and the data collected is meaningful. Innovative matter management systems incorporate dashboards that can present this data in a compelling way, telling the story of the team’s performance, and highlighting key contributions over time.

These visual tools simplify complex information into easy-to-understand insights, ready to present at board meetings, the executive team or external stakeholders.

Showcase your legal department’s value with Dazychain

Dazychain offers a unified view of all legal work. By centralizing matters, contracts, billing and insights into a single platform, an in-house legal department can take a holistic approach, streamline workflows and automate routine tasks But this approach doesn’t just make the day-to-day operations easier. It helps your team demonstrate their impact effectively, uncovering valuable data-driven insights that can easily be shared. Book your demo today!