From Cost Center to a Value Driver: How Legal Propels Business Growth

In-house legal counsel plays a pivotal role in upholding integrity, ensuring compliance, and driving strategic progress within a company. Yet, despite the pivotal nature of their work, legal departments often find themselves relegated to the label of a mere "cost center" within the organization. It's time to challenge this perception and recognize the invaluable contributions of in-house legal counsel to the company's bottom line and long-term success.

Historically, many companies viewed their legal departments solely through the lens of expense management, failing to appreciate the broader spectrum of value they bring to the table. However, this perspective overlooks the multifaceted ways in which legal counsel actively contribute to the organization's growth, risk mitigation, and operational efficiency. It also ignores the dramatic shift in the office of the GC over the last half-century, whereby in-house counsel went from legal subject matter experts to strategic business partners.

Mitigating risk

In-house legal teams play a critical role in minimizing legal risks and exposure, safeguarding the company's assets and reputation. From contract negotiations to regulatory compliance, their expertise ensures that the organization operates within the boundaries of the law while seizing opportunities for growth. By proactively addressing legal issues and implementing robust compliance measures, legal counsel actively protect the company from costly litigation, regulatory fines, and reputational damage.

In today’s world, in-house legal departments serve as strategic partners in driving business initiatives and fostering innovation. Beyond mere risk avoidance, they provide valuable guidance and support in structuring deals, navigating complex transactions, and capitalizing on emerging market trends. By aligning legal strategies with the company's overarching objectives, they enable agile decision-making and facilitate the execution of key initiatives.

Risk mitigation, even at its best and most effective, isn’t measurable. Well-drafted commercial transactions don’t easily translate to quantifiable organic growth. So how do we demonstrate the value we are bringing to our companies?

To truly appreciate the value of in-house legal counsel, organizations must embrace a paradigm shift in how they measure and evaluate their contributions. This necessitates a departure from traditional cost-centric metrics towards a more holistic assessment framework that encompasses both quantitative and qualitative factors.

How CLM can help

Here's where CLM platforms emerge as a game-changer for in-house legal departments seeking to demonstrate their value proposition effectively. By leveraging advanced analytics and metrics provided by CLM platforms, legal counsel can quantitatively measure their impact on various aspects of the business, including contract cycle times, cost savings, risk mitigation, and revenue generation.

For instance, legal technology platforms empower legal teams to track key performance indicators such as contract turnaround times, identify bottlenecks in the contract lifecycle process, and streamline workflows for enhanced efficiency. By harnessing data-driven insights, legal counsel can demonstrate tangible outcomes, such as accelerated deal closure rates, reduced legal spend, and improved contract compliance.

Legal analytics 

Legal analytics enable legal departments to identify patterns and trends within their contract portfolio, allowing them to proactively identify opportunities for optimization, renegotiation, or risk mitigation. By harnessing predictive analytics and machine learning algorithms, legal counsel can anticipate potential issues, mitigate risks, and capitalize on emerging opportunities, thereby adding tangible value to the organization.

The notion of in-house legal counsel as a mere cost center is outdated and fundamentally flawed. By embracing a strategic mindset and leveraging innovative tools such as CLM platforms, legal departments can transcend their traditional role and emerge as proactive partners in driving business success. It's time for organizations to recognize the inherent value of their legal teams and empower them to fulfill their potential as strategic enablers of growth and innovation.

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This post is written by Krista Russell. Krista is Head of Legal, Supply Chain, Airbus US Space & Defense and an adjunct professor at Miami School of Law, is a versatile legal professional with a knack for turning complexity into clarity. With a rich background in contract management, she brings a wealth of knowledge to the table. Her passion for law, coupled with her ability to adapt and learn, makes her a visionary leader, constantly driving forward with a playful sense of humor and a data-driven approach. The following blog encapsulates Krista's thoughts on the importance of working cross-functionally as a legal professional.