6 Major Trends of Legal & Compliance in the end-to-end process of mid-sized organizations

6 Major Trends of Legal & Compliance in the end-to-end process of mid-sized organizations

 

Insights from senior legal leaders from International Mid-sized Companies

 

Whether you have 10 employees or more than 100, every business has its own legal & compliance needs. The larger a business grows; the more legal & compliance issues are lurking around the corner. How Legal & Compliance is organized often varies by company size. Mid-sized companies are evolving quickly and most of them in a highly specialized field. Resolving legal issues may be therefore perceived as a delinquent piece of art. The legal & compliance department must be capable to deal with different topics, going from writing guidelines on cybersecurity and data protection to implementing a compliance management system.

To get a better understanding of the role, positioning, and daily challenges of the legal department within Mid-sized companies with international growth track, we interviewed senior experts right out of the field. From these instructive interviews, we were able to observe a series of striking trends. We have compiled them in this article, with a word of explanation each time.

1.An increase of volume and complexity of work vs. a decrease of headcount to handle it.

 

In recent years, legal departments have experienced an increase in both the volume and complexity of work they must handle. This is due in part to the growing number of regulations and compliance requirements that businesses must adhere to, as well as an increase in litigation and other legal disputes. At the same time, many legal departments have faced a decrease in headcount due to budget constraints and other factors. This has put pressure on existing staff to manage larger workloads and tackle more complex tasks with fewer resources. To address these challenges, legal departments have turned to technology solutions and process improvements to streamline their workflows and improve efficiency. They have also increasingly relied on outsourcing and other alternative staffing models to help them manage their workload effectively.

One of the legal areas where the volume of work seems to be increasing sharply is litigation management. Litigation poses a crucial threat to any business organization. Managing litigation more efficiently should result in saving time, money, and frustration.

“To better map, track and, in short, manage our litigation, we are currently looking at software solutions to support us in this.” – Chief Legal Officer S. De Wilde

2.Legal and Compliance will be split up to maintain focus.

 

To maintain focus and ensure that legal and compliance requirements are adequately addressed, many organizations are splitting their legal and compliance functions. This involves separating the legal team responsible for providing legal advice and representing the organization in legal proceedings from the compliance team, which is responsible for ensuring that the organization complies with laws, regulations, and ethical standards. By splitting these functions, each team can focus on its specific responsibilities and expertise, ensuring that legal and compliance matters are handled effectively and efficiently. Additionally, this approach enables organizations to better manage risks and avoid potential conflicts of interest that may arise when legal and compliance responsibilities are combined.

“There are 4 major business areas, actually these can be considered as 4 mini companies. Depending on the business area, the legal professionals work completely independently. Within the areas, there are also separate units, which also have their own legal counsels.” – Legal Counsel & Integrity Specialist, B. Potiev, ABB

The legal departments are more decentralised withing the company. Regarding compliance, the situation at ABB is as follows, B.Potiev explains: “We employ a specific Integrity Specialist for certain countries, but for smaller countries like Belgium, for example, I act as a Legal Counsel and Integrity Specialist as well.”.

3.The rise of KPI management for Legal & Compliance

 

Legal & Compliance are increasingly using KPIs to demonstrate their business value. The pressure is on for legal departments to demonstrate that they are taking control of their departments spend. They need to align their day-to-day performance with the goals of the business.

Most managers or directors experience and see KPI’s as a “controlling” mechanism. A mechanism to stretch the minimum performance of a team or department, and to increase performance year after year. On the other hand, team members experience stress to achieve the predetermined KPI’s. Today, there are still legal departments where there haven’t been KPIs implemented yet.

“We are not using specific KPIs to measure our team performance, but we do impose agreements, e.g., regarding NDAs. The only metric we do monitor strictly our legal spend.” – Head of Legal, W. Van Gaver, Care Property Invest.

However, especially for Legal Teams, using KPI’s is also a way to “sell” the importance of the Legal team within the organization. You can show the risks you manage and reduce, and the value you bring to the organization. In addition, achieving KPI’s fosters team spirit and boosts the motivation of each employee. At the company Hubs, the legal KPIs are each derived from the overall business objectives.

“The kind of KPI we keep an eye on for the current year is for example having the right documentation in place to allow the business to make as many products locally as possible.” – Head of Legal Department, L. Guimarães, Hubs.

4.Higher focus on becoming data- and performance driven as legal department.

 

Where certain Legal & Compliance departments perform strongly in achieving pre-set KPIs, there are also in-house legal teams that view KPIs more as an overall productivity metric rather than a tight target to be achieved monthly. Boris Potiev justifies this approach: “Ofcourse, we also try to set the right KPIs for our team. However, the problem is that you can pin a KPI on certain projects but are also very dependent on counterparties to achieve it. Take claims, for example: they can turn into a legal case and as soon as that happens, what influence do you still have on achieving a ‘time bound’ KPI in this regard?”.

Setting KPIs for Legal & Compliance carries the risk of closing certain cases quickly under time pressure, and thereby compromising the quality of the service provided.

“For smaller contracts, such as NDAs e.g., we do try to provide advice to the business within 2 working days” – Legal Counsel & Integrity Specialist, B. Potiev, ABB

5.Legal & Compliance become a proactive, high-valued, and strategic business partner rather than a mere advisory unit to the business.

 

A concrete outcome of a proactive working Legal & Compliance department is the organization of legal training sessions for the business.

“When I started working at my current organization, I immediately noticed that the legal team was working more reactive and bureaucratic. The same questions were always coming back regarding claims and that’s where I noticed the need to educate the business. We organised various legal trainings: on Contract Lifecycle Management, on our risk profile, etc.” – Head of Legal, L. Rudmer, Bilfinger Tebodin

B. Potiev saw the trend emerging within ABB: “Legal is no longer called in purely to review contracts e.g., we are now involved in projects from the beginning. I even support the decision-making process of setting up the business objectives.” A more pragmatic attitude of the legal department is crucial if they want to improve and increase their influence within the company.

An additional asset of Legal & Compliance for being prepared for the future is having also a more commercial attitude. W. Van Gaver, Head of Legal, confirms: “Where legal professionals are eager to look for problems and risks, the art is in also thinking along constructively and pragmatically trying to avoid most of the recurring problems.”

6.Knowledge sharing and knowledge transfer within the legal department and organization remain laborious, despite the increasing importance of both.

 

The importance of Knowledge Management keeps on growing every year. To boost the efficiency of legal departments, it is crucial to have an integrated approach on identifying, capturing, evaluating, retrieving, and sharing of all company’s information assets. However, a lot of legal professionals cannot find the time nor the discipline to make Knowledge Management operational for their department.

And what makes Knowledge Management so important for legal teams? If not everyone in your team has access to all information, expertise and knowledge, the legal department cannot excel in reaching their goals and KPI’s. To address retirements, re-organizations and people leaving the company, a strong Knowledge Transfer program is a must have. Otherwise, you are continuously re-inventing the wheel, answering the same questions, re-solving the same problems repeatedly.

“Knowledge sharing is something that is currently not going the way it should. Within our team, Outlook is our starting point, and our email calendar is the cockpit, so to speak. This way of working carries a great risk regarding continuity. If someone leaves our team, we no longer have a 360° insight into that person’s communication flows or work actions that were mentioned in his email agenda.” – Head of Legal, L. Rudmer, Bilfinger Tebodin

As a conclusion, we notice different trends for legal and compliance in the mid-size market. Trends whcih might be considered as concerns are: the pressure on existing staff to manage larger workloads and tackle more complex tasks with fewer resources, and the fact that Knowledge sharing and knowledge transfer within the legal department remain laborious, despite the increasing importance of both. On the other side, the other trends can be perceived as innovative ones: the reorganisation of Legal & Compliance, the rise of KPI management, the focus on data and performance and becoming a proactive, high-valued partner as Legal Department.

The only way is up. Are you in the lead of a legal department from a mid-sized company? It’s easy to get stuck in reactive mode worried about missing something critical for your business. You deserve a solution that equips you with the tools you need to easily demonstrate your business value.