In-house counsel can be exceptionally valuable internal business partners, providing organisations, individuals and leadership teams with real competitive advantage. For many years, in-house counsel has been seen by some like many other admin and back office functions, however businesses that are switched on are finally giving the legal function the seat at the table they deserve.
In-house counsel have at times been considered by those in the business as the ‘big brother’ inside the organisation, with some considering them as stifling growth, creativity and blocking progress. As we enter 2019, and with a growing list of organisations finding themselves in very difficult positions by not taking or ignoring the right legal advice, it is evermore critical that the leadership team and in-house counsel work together. This requires the commercial team to be somewhat mature in their approach to business and to understand that this functional expertise is required and can add value. It also requires the in-house counsel to both think and work commercially, and between them they should create, nurture and, develop a meaningful two-way relationship.
Demonstrate both legal expertise and a depth of knowledge
Legal counsel are generally experts, trained professionals with many years of experience. However not all experience is academic, a lot is learned through working alongside different organisations and in different fields and there is significant value in what an experienced in-house counsel can bring to the table in this regard.
Commercially focused individuals often have a keen eye for a commercially attractive deal that will sustain their business for the foreseeable future and no doubt help deliver some personal objectives. The same can often be said on the other side of the table. The customer wants a commercially attractive deal with the normal assurances of security. However, a good commercial proposition is only half of the agreement. Strong commercial agreements are often built around specific volumes, pricing, stocking agreements and overall service level agreements, but there are many other aspects to consider which are often overlooked and considered ‘small print’ such as warranty’s, specifications, definitions of wording etc. Counsel’s practical and clear advice is often needed on how these items are or could be interpreted.
The commercial team also need to understand the risk around an agreement and ultimately what the exposure is for the organisation, for example, ‘what is our position when things go wrong?’ The commercial team need in-house counsel to share not only legal expertise but their general experience and knowledge gained over the years and this in a way that is practical, commercially considered and communicated.
Consider all outcomes
It is very easy for a commercially minded individual to only see the upside on a business agreement or transaction and to ignore the pitfalls, they are focused on only a couple of key measures, (often sales growth and profitability). Deals are often done with customers and suppliers of which there has more then likely been a relationship built up over time with a certain level of trust. Whilst this can smooth a negotiation process this is not the basis in which to build a lasting commercial agreement.
In today’s world it is a fact that people are moving roles and leaving organisations far quicker than they once did, organisations often encourage progression and transferring of individual’s to fast track their development. This is great for the individuals and the company but not great for a commercial arrangement that has been built on trust alone. Even though they may not like to admit it, commercial leaders need in-house counsel to take a detached view of the situation and remove the emotion which is very difficult for the commercial individual to do at times. We have all witnessed conversations and statements along the lines of ‘its ok, Dave and I know the score, although it’s in the agreement it won’t come to that as we know how to work things out between us’. Legal counsel can take a pragmatic look at all their potential issues and what-if scenarios, ultimately leading to an agreement that stands up to organisational changes that are now inevitable.
Be a patient and commercial business partner
Jargon. There is lots of it about. The expression of legal jargon has been around for a long time and is often used to express things that people don’t understand or they are simply not particularly interested in. Commercial transactions and agreements are becoming longer and far more complex as each party seeks to cover all options and every eventuality. Customers want guarantee of supply at a fixed price and suppliers want certain volumes and to know what standard the volume us being delivered to. The sentences and wording are often complex and challenging for the layperson. The commercial team needs an in-house counsel that can be patient and put these expressions and wording into a format they can understand, they need their legal partner to make it real for them.
In-house counsel need to be patient in advising the commercial team, the key word here is advise, which is defined as ‘offering suggestions about the best course of action to someone’. It should never be a dictation as to what should happen but instead a supportive approach in outlining the key elements of the agreement and what this means or could mean for the organisation. It is easy to get entangled in the competitive spirit of negotiation and the commercial team need the in-house counsel to be the voice of reason, pull back on negotiations when required, and to understand that this pulling back wont always be well received.
So practically, and from the commercial team’s perspective, what can the in-house legal team or individual do to ensure that they add value and become a valuable business partner?
- The in-house lawyer must see themselves as part of the team, this is about the individual having the right mindset and the determination to be seen as part of the team and not another member of the back-office admin team.
- Don’t behave simply as the lawyer, behave as part of the business team and ensure that you are driving at the same thing as the rest of the individuals within the organisation, get to know the people and their needs and earn their trust.
- Get to know the business you are advising, study their products/services, their markets and their customers, understand the challenges the organisation is facing.
- Understand the organisational or individual goals and what needs to be achieved, this way you can ensure you are effective in assisting to reach those goals.
- Balance risk vs. reward: some risk is often required and being able to balance the risk for the business vs. the reward is very important so understand the short and long-term commercial value of the agreement.
- Be on the commercial team’s side; understand the challenge and the battle and provide general counsel not just in the legal sense.
- Understand the businesses long term strategy and work with this is mind.
- Advise – Don’t preach, don’t dictate, don’t become frustrated. The best legal counsels I have worked with are true advisors, they frame things in a way that makes sense and they point out the concerns or potential issues, they are not seen as blocking progress, they work with the business to find a way through a problem.
- Don’t automatically refer to the rulebook or legal theory, talk about real life examples with the business. If you have made or witnessed mistakes talk about them! Make the advice real and bring it to life.
RWG Enterprises Limited is a dynamic consultancy business based in Derbyshire, created to support small to medium size companies with both igniting and supporting growth, whilst also supporting with productivity improvements and cost reduction initiatives to ensure year on year bottom line improvements. We also support the creation and implementation of longer-term business plans whilst offering general business advice.