REUTERS | A man carrying an umbrella walks across the Old Town Square during a rainstorm in Prague, May 30, 2013. REUTERS/David W Cerny

Does culture eat “value” for breakfast? Why culture might be a more meaningful metric for forward thinking legal teams

“Culture” is defined as the ideas, customs and social behaviours of a particular people or society. In organisations, culture encompasses the ideas, customs and beliefs that shape how people work together. Culture is made by people and is a defining factor in determining if they stay and, ultimately, what kind of talent you can attract.

The best cultures have a high degree of safety but safe here does not mean boring! It means an environment where individuals can be themselves and bring their whole range of thinking and creativity to work. Organisations with strong cultures are more innovative and better able to cope with adversity because they have the best talent.

Regulators are becoming more interested in culture. In the United Kingdom, the Financial Conduct Authority is taking a special interest in the cultures of financial institutions and in behaviours that could be classified as “non-financial misconduct”. The wider ramifications of movements such as #BlackLivesMatter, #MeToo and #TimesUp mean that boards and shareholders are more attuned to cultural factors that can shape their companies’ reputations. As general counsel (GC) and their teams increasingly become arbiters of culture, it’s logical that the cultures of their own departments should become a focal point.

Identifying a legal team’s culture

It is no longer enough for in-house lawyers to simply adjudicate on the legality of a certain course of action; they must also consider whether it looks and feels right. Even if something is legal, will it attract censure from regulators, industry peers or the court of public opinion? This arbitration of broader risk factors is now a significant aspect of the GC’s role and is often where lawyers add most value to their C-suites and boards.

The legal team’s culture must always be viewed through the prism of how the wider organisation thinks about its culture. In addition, legal teams will often have their own distinct culture, which may affect the way that their business colleagues view them. For many GCs, reframing where Legal sits within the wider organisation’s culture is often one of their first tasks when they take on the role. Questions they may need to consider include:

  • Is the legal team’s culture too far removed from the organisation’s culture?
  • How is Legal viewed within the organisation?
  • How does the legal team view itself?

While taking an objective stance when needed is critical, being too isolated can carry its own risks. Some of the largest corporate legal failings resulted from lawyers either becoming too inextricably intertwined with the business or completely divorced from it. These positions are polar opposites, but often lead to the same outcome: a failure of governance.

Project Ethos

In my book, Business Thinking in Practice for In-House Counsel, I consider the value of culture more broadly in organisations and its increasing importance to legal teams. The case study for the culture section of my book was based on Pearson’s legal department and their culture initiative known as Project Ethos. In a presentation for Pearson’s legal department, Bob Mignanelli, COO for the legal department and executive sponsor of the team’s culture change initiative, laid out the reasons why legal departments need to think about culture:

  • A legal department’s culture is a critical factor in determining its success as a business partner to the broader organisation.
  • A strong, positive culture will attract top talent and create an environment of elevated performance across the organisation.
  • A weak, negative culture will drive away top talent and create an environment of mediocrity.

The starting point for Project Ethos was to evaluate the legal department’s purpose. The aim was to identify what was unique about the in-house legal function and prevent the CEO from, hypothetically, opting for an outsourced legal department solution. The exercise considered all the unwritten assumptions that made the legal department what it was and assessed whether they helped or hindered the team in achieving its purpose: the proactive ability to prevent issues and the pragmatic understanding of the business in delivering solutions.

Mignanelli explains:

“The key focus had to be looking at what was working but also identifying issues that were preventing us from getting to where we wanted to be.”

On a positive note, the group found that people wanted to do the right thing for the business.

“However, on the negative side there were unwritten assumptions that everything had to be perfect and that the lawyers had to stay in their lanes or not express opinions outside of the legal remit. The key issues that came out of that assessment included how to break down historical silos and how to get people to be more willing to take risks. Tactically, the team also wanted tools to enable them to do their jobs better, and to have greater transparency and communication from leadership to the rest of the department.”

Re-evaluating culture’s role in an organisation

As Pearson’s legal team’s exercise showed, the culture of the legal department must be considered in relation to the wider organisation and the team’s function within it. Would considering culture as a strategy, rather than the ubiquitous “value”, ultimately bring more success for many legal teams as it focuses on mindsets and behaviours? Culture does not limit the legal team’s purpose merely to a value that can be measured and is, ultimately, reactive. Considering culture ensures legal teams have the right mindset and talent base for the future and can be proactive.

What is crucial to a robust culture is a working environment where every individual can bring the best version of their professional self to work. Their ideas will be more creative and legal teams and their organisations will be better able to adapt to the changing environment we find ourselves in. Traditional office culture is being re-evaluated in the light of the COVID-19 pandemic, with long-term shifts in working practices. For example, how can we define culture in a virtual world? As a result, culture is something that every organisation and its legal team must consider now.

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