The events of the past couple of years have pushed all teams, organizations, and businesses around the world to the breaking point. On many occasions, it seemed that teams were scrambling just to keep up with adjustments made on the fly. Whether it was mandated work-from-home policies, distributed teams, or compliance with local vaccine and social distancing requirements, situations constantly changed and work was frequently disrupted.
With the pandemic slowly entering the rearview mirror and teams trickling back to the office, it’s time to take stock of the current situation in today’s legal world and the current role of legal departments within their organizations.
This year, Onit released the Enterprise Legal Reputation (ELR) Report, which aims to explore opportunities for improvement in the corporate legal environment. The most recent version, released earlier this year, reveals that a relative disconnect exists between legal departments and their internal clients. Specifically, teams that have a high impact on revenue and that also serve as a public face of the company, such as sales, marketing, and procurement, have reported fractured dynamics with legal.
Two research studies were conducted: one for white-collar employees and another for individuals working within legal departments. Conducted by the Provoke Insights market research firm, employees were asked about their perceptions regarding their company’s legal department.
The respondents ranged from 22 years old to 65 years old. Aside from being white-collar employees, they didn’t work in the non-profit, education, or government sectors. They were also from large companies with at least a six-figure revenue.
4,000 individuals took part in total, with 1,000 each from the United States, the United Kingdom, Germany, and France. As a result, certain responses were potentially affected by cultural differences and government regulations.
Legal Department Reputation
46% of all employees considered their legal department as a trusted advisor. With the exception of the United States, the other three countries described Legal as efficient. At the same time, 39% of US employees indicated that legal was a good business partner, while the other three rated legal’s ability as a business partner much lower (as low as 16% and as high as 28%).
While it is good that many see Legal as an efficient, trusted advisor that can serve as a good business partner, the numbers show that a majority don’t. For example, a staggering 84% of French workers think that Legal isn’t a good business partner.
On top of that, a significant majority in each country didn’t describe legal as modern. Germany scored the highest with just 26% saying Legal was modern.
Not all is bad news, however, as few described legal as uninvolved, automated, bottlenecked, or an unwilling partner. None of these four categories received over 10%. A majority of Americans even characterized their legal departments as their company’s protector, while Germans decided legal as a source of good advice.
46% of all employees considered their legal department as a trusted advisor.
What can we take away from these numbers?
On the one hand, Legal regularly and willingly takes part in company matters, and they don’t seem to cause a major hangup in the process. On the other hand, Legal operates inefficiently enough that they aren’t seen as a trusted, good business partner.
Moving forward, Legal should continue to actively contribute to the company’s goals, but Legal should also explore opportunities for modernizing and operating more efficiently. One step in the right direction would be to automate routine processes that require minimal thought by implementing CLM software or other legal tech. By improving efficient performance and freeing up members for more high-value efforts, this should also help increase Legal’s reputation as a good business partner.
Legal Department Relationships
Most reported having a positive relationship with their legal department, although British employees were more likely to describe their interactions with legal as poor.
Expectedly, different departments experienced differing levels of difficulty when working with legal. The IT, Marketing, and Procurement departments were the most likely to encounter challenges when interacting with legal.
A strong majority (62%) of HR and Finance departments indicated they interacted well with legal. The same could not be said for British Sales teams, who faced a similar degree of issues as British IT and Marketing teams.
Naturally, it’s to be expected that there’s variation in how departments relate to Legal. It’s extremely challenging to maintain high levels of satisfaction across all employees in all departments. So of course there will likely be some that had negative experiences.
However, when ~37% of certain departments report having had a good experience, there’s plenty of room for growth. Without knowing the particulars of the negative interactions, it’s difficult to provide commentary on what specifically Legal can approve.
Instead, if a Legal team understands that its interactions ended negatively, it should explore why it happened, what it can take away from such experiences, and how they can improve on it for the future.
Essentially, it boils down to adjusting perceptions and treating other departments like a customer who should be satisfied. No one likes it when you go to a restaurant and your waiter is a brick wall who simply tells you what’s not available, but everyone appreciates when service helps point out what’s possible.
Legal Department Interactions
The most common matters that are brought to the attention of legal departments are issues related to contract review, signing, and compliance. A respectable amount of HR matters are discussed with French and British legal teams. Americans were more likely to have reported no interaction at all with Legal.
Half of all employees found their legal department to be inflexible. However, variance across countries was quite large. Well over half of French employees deemed their legal colleagues as rigid while a clear majority of Americans disagreed, implying that American legal teams are more likely to be flexible.
Among respondents who believe that the legal department is poor at negotiating on behalf of the company, a majority of Germans said that it was because Legal is too slow. By comparison, only 20% of Americans deemed Legal as too slow and 15% said Legal was too cautious. Almost half of all employees in each country blamed Legal for being too process-oriented. Americans were the most likely to consider their legal teams too understaffed.
Legal Department Responsiveness
Hybrid work setups are the most common format for legal teams around the world, although German teams are more likely to be working in the office while American teams are least likely. Despite their more remote nature, especially compared to their German colleagues, American teams can be considered almost as responsive to messages.
A significant majority of employees reported that their legal departments reply to requests within a week. In the case of Germany, the US, and the UK, almost a third of respondents said that Legal can respond within hours. With regards to France, only 16% of employees can expect a fast response within hours, whereas 22% will expect an answer after a week or longer.
However, at least a third of all respondents in each country admitted that legal teams seem to be having response issues since going remote. In the case of France and the United Kingdom, this number climbs to 42% and 40% respectively.
After switching to a remote format of working, at least 35% of employees in each country think that transparency is low. For French teams, this percentage jumps to 49%. On the flip side, over 6 in 10 Germans, British, and Americans say that going remote provided more transparency.
Without knowing the specific demands facing each legal team, it’s not possible to outline a clear path forward. However, if one of the reasons for slow responsiveness is a considerable amount of time and effort drafting and reviewing contracts or clauses, then one possible solution is to transition to a contract lifecycle management platform. For instance, AXDRAFT CLM helps teams cut down on their routine work by 80%. This increase in time savings could then be used to help improve responsiveness.
Two-thirds of employees bypass their legal department, even if it breaks company policy. Americans are the most compliant, with just 53% admitting their non-compliance. However, 73% of French employees bypassed Legal.
The primary reasons for bypassing Legal were bureaucracy, red tape, and that interacting with Legal would slow down the entire process. And almost one-quarter of British and American respondents stated that it was because Legal wasn’t part of the process and that Legal doesn’t understand business needs.
There are multiple options to resolve this situation.
One idea, even if it’s a bit extreme, would be to unilaterally declare that all contracts must go through a certain process (or system) in order to be valid contracts. However, while effective, this would not help Legal improve its reputation with other departments. If anything, such a unilateral mandate cause all departments across the board to lower their opinion.
A softer approach would be to find ways to speed up certain contract aspects. This could be automating document drafting, enabling esignatures, or preapproving contract templates. Ultimately, anything that simplifies the “red tape” that departments believe is an inconvenient drag has the potential to greatly improve compliance.
Legal Department Impact
Slightly over half of employees believe that Legal has a positive impact on sales and revenue. And most rate their Legal department’s ability to negotiate as sufficiently good, and 48% of all employees think Legal helps accelerate deal cycles. However, that means 52% don’t think Legal speeds up deals.
Furthermore, if Legal causes deal cycles to slow down, it negatively affects close rates, earnings, and win-loss. Adding to the problems is when a legal department is weak at negotiating, it can cost a company severely. Estimates on annual revenue lost range from 88% (France) to 100% (United States).
To avoid slowdowns or logjams, Legal can explore opportunities that help speed up routine work, such as gathering signatures or approvals and sending notices. Accelerating these steps would manage any risk of accidentally being a drag on the process.
For example, routine contracts that have little to no change, such as NDAs or license agreements, can be pre-approved and automated to allow the departments who need them to process them with minimal involvement from Legal. By pre-approving documents and getting Legal involved only when necessary, this should enable teams to close a significant numbers of deals faster.
Additionally, nearly half of all employees think that Legal has no impact on customer renewals, procurement, and innovation. The silver lining is that few believe that Legal has a negative impact on these matters.
Chapter 1 of Onit’s ELR report reveals that the situation for legal departments as a whole is quite mixed, and that the present situation has plenty of room for improvement. On the one hand, it’s certainly a strength that several departments have a positive relationship or good interactions with Legal. On the other hand, it’s troubling that a majority of employees bypass their legal department, simply because they perceive Legal as being overly bureaucratic, slow, fixated on processes, and limited by red tape.
While each legal team has their own concerns and challenges, one of the first steps they should take is to explore ways to improve compliance. Bypassing Legal, violating company policy, and being in non-compliance so frequently is, arguably, a recipe for disaster. However, compliance for compliance’s sake is likely to ruin Legal’s reputation even more, so discovering opportunities to increase compliance without sacrificing their reputation is critical. Better yet, the opportunities should try to enhance Legal’s reputation.