On the first day of the 2021 In-House Financial Services conference, managed legal services business Factor hosted a roundtable for in-house counsel to share ideas about solving the needs of tomorrow while grappling with today’s headaches.
The roundtable was co-moderated by Factor head of solutions Ed Sohn and director of solution sales Ian Morris who were joined by a cohort of in-house legal counsel from across the financial services industry.
The variety of opinion from well-established businesses through to ones in ‘hypergrowth’ mode beautifully illustrated how wide the problems of being an in-house lawyer can be, but also how resilient and determined these practitioners are to provide operational excellence in their environments.
For instance, one lawyer spoke of the challenges they faced being the lead counsel of a hypergrowth business inside of a wider corporate structure. How do you effectively convey your pressures and anxieties to the board when you face the issue of being slightly siloed in your comparatively small team? One solution posed to this was to ensure you have as much overview of the entire business as possible.
“In my previous role, I realised that legal was quite conservative. When other teams were pushing forward on hiring, we were doing the balance because we are an expensive resource. Because of this, I didn’t think far enough ahead. The next year we got our budget tightened and all the other teams had been built up. This year, with the company I’m at now, I get foresight across all of our key stakeholder teams. I can see their recruitment plans for the next 12 to 18 months, and I can mirror them.”
This is a vital lesson and extremely sage advice. In-house counsel are as much strategic advisers as they are legal. Factor is engaged with a growing number of clients on a journey to implement new tools to better address this challenge and also deliver a platform to drive strategic change. This means that any budget cutting will negatively impact the quality of advice, especially in a team where numbers tend to be a fraction of the size of other teams.
The issue of scale within a legal team was another recurring theme throughout the afternoon’s conversation. While smaller teams can be more agile, it does place a greater burden of knowledge on that team. Naturally, a smaller team will need to have a strong overview of all the legal pressures facing them, but they must also be experts in their own fields so they can provide the strongest advice possible. The Swiss Army Knife analogy applies here and that is exactly what in-house counsel have to be. The challenge is keeping every blade within the knife razor sharp.
“It’s about the different articulation of what was said about investing in subject matter experts against generalists. That kind of balance to strike in a very small legal of team of one or two where you are both by mandate. You have to be a generalist and a subject matter expert across a number of problems all while serving your clients.”
Really, client service is at the heart of all of these points and ensuring the business can operate to its full potential. But when a business is growing, it has different problems and challenges along its journey. These problems require different solutions along the way and what once solved a problem is not guaranteed, and indeed frequently, will not solve an issue further down the line. This is called Overgrowth Obsolescene where you have outgrown a solution to a problem you previously faced. It must be said that this headache does indicate that a business is on the right path. This will not relieve the pressure on the legal function in any way, in fact it simply ramps it up and new solutions need to be found to new problems.
“The path to scale indicates a continuous amount of investment over time. Once you start to turn over from red to black, once you get into that Return on Investment stage, you might be dealing with that overgrowth and obsolescence. That might mean that the operating model is three years old or the technology is four years old and the business has moved on from its demands. That uncertainty of value is a huge challenge,” said Ed Sohn of Factor as he shared a few final thoughts for the session.
In a bid to solve this problem, many of those involved spoke of their business’s attempts to forecast where the problems are going to arise and how those problems can best be handled. Sadly, this is the toughest challenge facing us all. Crystal balls don’t quite have the efficacy most may hope for and one attendee’s answer to whether they could forecast accurately was that it is ‘simply impossible’.
While forecasting to 100 per cent accuracy may be impossible, the optimism across all of those who were present was palpable. It demonstrated that this group of lawyers are as adaptable as they are resourceful. The future of legal functions in financial services is in safe hands with this crop of talent.