Wolters Kluwer’s ELM Solutions has released the results of our 2019 General Counsel Barometer, which we published in partnership with The Lawyer, providing a snapshot of the priorities and expectations of European legal department leaders. This year’s report is a follow-up on our 2017 survey, showing not just the current state, but the evolving trends over the last two years.
ELM Solutions surveyed 200 European general counsel, representing companies across a range of sizes and sectors throughout Europe. We were eager to learn more about what their concerns and goals are, and how they plan to move forward. The central takeaway from their responses is that European GCs are increasingly focused on the strategic business goals of their companies. Many, particularly those at the largest organizations, are turning to technological solutions to help achieve their goals. (I’ll explore the technology side further in my next post.)
Three of our survey questions yielded results that are particularly illustrative of the changes that European legal departments are undergoing.
In 2017, when we asked GCs to characterize their expectations of the legal department’s role over the next three years, 38% expected that they would be increasingly strategically focused and “viewed as an integral part of the business leadership”. In only two years, that percentage rose to 78%. This is an enormous shift, which reflects evolving priorities away from a purely functional role for legal teams.
This change was most pronounced in the largest companies. At companies with more than $25 billion in annual revenue, 89% said that they expected their strategic contributions to increase. Among these largest of companies, not a single respondent reported they expect to be entirely functional or primarily reactive over the next three years.
In a global business environment, where companies must grapple with fluctuating political realities, events such as Brexit, and trade agreement changes that can affect all industries, strategic input from legal departments can have a real effect on business decisions and execution plans. Eric O’Donnell, Head of Management and Development (Legal Department) at Total, noted “I do insist on the element of influencing the strategy because if we are involved early on and constantly in transactions and in business, then our advice can have an effect on the bottom-line.”
When getting more specific about the particular priorities that legal departments have for the next calendar year, the results aligned with the increasing strategic focus. The top priority, by a wide margin, was “Adding value to the business and becoming a strategic business partner,” with 48% of respondents ranking it highest. This represented a 30-point jump from the results in 2017, when only 18% chose this as their top response.
Meanwhile, “improving internal efficiency” as the top selection went from 26% in 2017 to only 7% this year. We can’t assume that legal departments are disinterested in efficiency, however. While this steep decline shows that internal efficiency may be less prominent as an end goal, the need for efficiency is as strong as ever. In order for legal departments to meet their strategic goals, they will need to work efficiently so that team members have time for the higher-value, business-focused work they are being asked to perform.
Given the need to deliver strategic business value, and the significant shift that represents, it is no surprise that we have seen a change in the way legal departments are handling legal operations. In 2017, 95% of respondents indicated that, in their organizations, the GC directly oversaw legal department operations, and only 5% had another individual managing legal operations (either in a dedicated or partial role). This year, only 47% of GCs directly manage operations, while 49% of respondents have someone other than the GC in an operation management role. In addition, the majority of these operations managers are dedicated solely to that role.
The increased focus on delivering strategic value goes hand-in-hand with an emphasis on more closely managing legal operations. With operations professionals helping to ensure the department runs efficiently and effectively, in-house attorneys are able devote their full attention to understanding and achieving the overall business goals. The survey results showed that technology also plays an important role in that dynamic, a subject I’ll explore further in my next post.
Download the full 2019 GC Barometer report for more insights on the trends currently shaping legal operations in Europe.