So we’re gonna change too.

In last month’s column (Post 253), we defined NewLaw as a significantly different approach to the creation or provision of legal services than what the legal profession traditionally has employed. Thus, it is reasonable to ask …

Q.  Why do we need a different approach?

It may seem the old ways are working just fine. Law firms are making money, clients are delivering services to their businesses, the wheels keep turning. And if ain’t broke, don’t fix it … right?

Sadly, for those who do not like change, that’s not how this story goes.  We need a different approach because legal services have not evolved with the rest of the changing and increasingly complex world.

For context, let’s start with the driving force in legal: Clients.  Because the NewLaw sector is, to date, overwhelmingly focused on the organizational clients (i.e., corporations), it is useful to focus on the changing role of General Counsel.

Q.  How has the role of the General Counsel changed over the last fifty years?

At a very high level, and limited to a US perspective, the role of the General Counsel has evolved in three stages.

Wave 1: Pre-1980s

In this era, internal legal counsels were limited to a reactive role overseeing matters farmed out to law firms. They were air traffic controllers, while senior partners in outside law firms served as the primary counselor for the CEO and the board of directors. As Professor David Wilkins puts it: these lawyers were in “a position of marginality and subservience—think ‘house counsel,’ as in ‘house pet.’” David Wilkins, “Is the In-House Counsel Movement Going Global?  A Preliminary Assessment of the Role of Internal Counsel in Emerging Economies,” 2012 Wisc L Rev 251, 251 (2012)

Wave 2: Complexity/Globalization

Ben Heineman Jr.

The “in-house counsel movement” for increased power and prestige took off in the late 1970s and was documented and well underway by 1989. See, e.g., Robert Eli Rosen, “The Inside Counsel Movement, Professional Judgment and Organizational Representation Organizational Representation,” 64 Ind L J 479 (1898).  Now, as General Counsel, these lawyers became key members of the corporate decision-making team. With Ben Heineman Jr., the head of GE’s hallowed legal department, leading the way, as detailed in his book, The Inside Counsel Revolution (2016), General Counsels began “hiring the best and brightest for inside legal departments and bringing work inside rather than farming it to outside firms, reducing legal costs and shifting the power relationship.” Elaine McArdle, “In the Driver’s Seat: The changing role of the general counsel,” Harv L Bul, July 1, 2012.

While General Counsels of multinational corporations were dismantling the law firm-corporation relationship, their businesses were facing the unprecedented complexity and risk of operating in a global economy. Outside counsel could no longer serve as the trusted advisor to the corporation because they didn’t have adequate context—i.e., they didn’t have a line of sight into the business.

Instead, GCs and their teams, who existed within the corporate hierarchy, were best positioned to understand the company’s business and “to engage in the kind of risk assessment and preventive counseling that managers need to survive.” David B. Wilkins, “The In-House Counsel Movement, Metrics of Change,” The Practice, May/June 2016.

It is in this era that the legal value chain began to unravel, and the General Counsel gained power over outside law firms and a strategic seat at the C-Suite table.  See Ben W Heineman, Jr, “The Inside Counsel Revolution,” Harvard Law School Forum on Corp Governance, Mar 29, 2016 (discussing details of both internal and external ascent).

Wave 3: Digital Revolution

In the 1990s, the Digital Revolution had corporations questioning: what business am I in, and will I survive? (Think Blockbuster.)

In this world of exponential change and lowering entry barriers, businesses have more urgent critical needs with fewer resources. The result? Budget squeezes and the “more for less” demands that have defined in-house life for the past ~20 years.

The saving grace, however, is that increasingly sophisticated technology, knowledge capture innovations, and problem-solving approaches are bringing us into the era of data-driven law, allowing General Counsels to maintain their strategic positions of value instead of getting squeezed into a smaller position.

NewLaw exists in response to this third wave of client evolution.

Q. How much of NewLaw is law versus law combined with something (Law+)?  

Bjarne Tellmann

As Bjarne Tellmann, SVP and General Counsel of GSK Consumer Healthcare, frames it:

I spend 10% of my day dealing with thorny legal issues, and 90% of my day figuring out how I can deliver those services without putting everyone into overdrive and burning out the legal team.

 Law firms have traditionally addressed the 10%, and in most cases with the assumption that the problem their client has is a live issue that needs solving.

Yet, that is the tip of the iceberg. General Counsels now ask: What about preventing thorny legal problems in the first place? What about the other 90% of my purview and challenges, that we know have broadened in scope and complexity since the dismantling of traditional firm-company relationships of the pre-1980s era?

In reference to this 90%, Bjarne remarks:

There are huge white spaces of Total Addressable Market that no one is filling. NewLaw is beginning to understand that and filling those spaces much more rapidly and with much more innovation. That’s what clients need.

Whether process optimization, culture, talent, cost, risk mitigation, revenue opportunities, preventing problems or effectively going digital to keep pace with the business, General Counsels have a million things they are thinking about beyond traditional legal issues. And they are asking for help with those areas from NewLaw.

Q. When it comes to NewLaw, where is the best place to start?

Bjarne advises his counsel and providers to start with a conversation, asking:

What are your biggest problems? And don’t just tell me about your legal problems.

How can I help with that?

Do you have any ideas?

Seemingly straightforward advice, but my guess (and experience) is that these conversations quickly lead into their own kinds of thorny, and fascinating, fields.

In summary, if we can ask the above questions and listen with a sincere desire to help, we can, with persistence, succeed in NewLaw.

NewLaw Fundamentals Q&A is published on the first Wednesday of each month.