When you own a business, you may need to have several departments within it. These departments will ensure that you don’t need to outsource some services. You can get most of the benefits quickly when you have the departments within your company.
For example, you won’t need to contact your lawyers and wait for them to respond when you have a legal department. The legal guys in your company will be there and easy to reach. But that’s all the legal department can help you with as a business owner.
Having a legal department can also be a contributing factor to the growth of your business. Here are some ways that the legal department can contribute to the development of your business.
- The Operate Within the Corporate Spectrum
- A True Business Partner
- Profit Centers
- They Integrate into Operational Issues
- Influence Organization’s Ability to Achieve Strategic Goals
The Operate Within the Corporate Spectrum
Being that they operate within the corporate setup, you don’t have to budge them with most ideas as ones that aren’t. For example, a well-structured legal department will have a director who sits on the executive committee.
The department, though, won’t have the same way as the one attached to the CFO. The department will have more consideration due to a director being cited at the executive committee. It can then have some impact on most of the internal deliberations present.
The strange part about having a legal department here is that the department positioning will be dependent on the senior management. They will first have to see what the department adds to the business before any considerations are made.
It will be more of the idea that senior management can control what the legal department does. There will be no time or losses that can come as can be experienced with rogue law firms who do as they wish. The department will indeed be under the corporate umbrella.
A True Business Partner
The following reason why the department is helpful and can help your business to grow is they are quite the business partner. Having a legal department is usually proactive and will provide value for the company most of the time.
The first thing that a proactive legal department will do is provide the staff with an effective solution for risk control. This is one of the aspects that any business may struggle with, as most risks can lead to losses. When you have a lawyer around, that can easily be averted.
It isn’t about losses, though; there are times when run-ins with the law can come with some risks. With proactive legal guys around and playing roles in other departments, these are things that can be avoided. Also, it’s not about the aggressive lawyers alone – in your legal section.
Some can be there for the reactive mode and are ready to respond to fires that creep in within the business. They can do this for all departments and ensure every department is legally covered. In general, the legal department, when involved in most departments, can help with risk management.
That can significantly improve the performance of each department in the business.
If you haven’t figured it out, legal departments can be a significant profit center. For example, when the legal department is involved in all departments, there’s excellent risk management. This will ensure that there are no consequences that can come from poor risk management.
Some of the consequences of poor risk management are a degraded image, public trial, or even hefty settlements. These can play in the hands of the competitors and can put a significant strain on the business.
When those losses don’t happen, the business will rarely find itself in the red -financially. When you break down the numbers, they are pretty clear too. Here’s a simple breakdown of the numbers, with regards to profit, that a legal department can offer you;
- 2% – 7% when it comes to cost reduction. The best way to up your bottom line has got to be with cost reduction. Those percentages don’t seem huge, but overall, they can be significant.
- 1% – 2% increase in revenue
- Lastly, the administrative costs can also be reduced to around 30%
For a further breakdown of those numbers, you can check out the Aberdeen Study on the benefits of contract management.
The legal directors will look to keep the department’s position as an actual profit center which will help the business grow. This can be a bit drastic, but it is better for everyone if it helps the business keep more money in its pocket.
The products that will be put out will also be safe in most cases as it won’t primarily be about avoiding breaking the law. It will be out and out risk management which leads to safer and legal fronts.
They Integrate into Operational Issues
For the legal department to be effective, they need to be fully integrated into every department. This means that the legal department needs to have a clear understanding of the company’s strategic operations. This will involve every operational issue that the company bears.
This will involve companies that have large projects collaborating with different project managers. The legal department will need to fully iron out all the aspects of these contracts and the other project managers. The lawyers can also be of great use when identifying risks and negotiations, which will be in plenty.
The department may have more to do when all this is happening. And there may be a need for legal department software to help with the smoothing of some of these skirmishes. With Brightflag legal department software, the department will be fully integrated into the various departments. The legal department will have all the info needed about every department when they have the software to help. This will ensure that the preparation of contracts can be relatively simplified. It also means that the department can also anticipate negotiating difficulties.
This will be crucial as they will easily facilitate the signing of deals and make it easy for the involved department. This can also come in handy when it comes to litigation management when it comes down to it and court trials.
Influence Organization’s Ability to Achieve Strategic Goals
Another aspect that the legal department can play is it can help the business achieve strategic goals. For most companies that only hire law firms, firms won’t have the full scope of the goals as they aren’t involved in the company’s day-to-day running.
With a well-structured legal department, they will be set up in a way that they will be intertwined with every department. No department will go under the radar and unchecked when there’s a legal department. There will be an ethical obligation to see out every negotiating aspect of the business.
As stated above, the legal sector will know to be informed on crucial aspects of the departments to avert risk mostly. First, the legal department needs to ascertain that every deal the company is involved in is legal. This isn’t all about risk management, as stated before.
There are some cases where the risk can be legal or not, but the legal department can help to avoid the risk altogether by looking at the variables. They will only need to ensure that every deal is legal and won’t bring in action here.
For example, please look at cigarette packs; they have a disclaimer that clearly warns against the excess use of the substance. This is how a legal department can help the business avert action in case things go south. With that disclaimer, you can’t take any legal action against the company when you are harmed by excess use.
Those fine-print details that appear on most products are the work of legal departments. Before they can do such, they have to determine if what the company is putting out is permitted. When it’s questionable, they come up with bright ideas.
The company’s strategic goals can easily be achieved when the department knows what goes on in each department. Such disclaimers can be provided on top of legal frameworks for the workaround.
Most of the time, though, before figuring out if a practice is legal, the legal department will seek to find out if it’s ethical too. Being legal is based on a book – the law, but being ethical involves several things. If the legal department can ascertain legality but not moral values, they will advise further.
At times, an action can happen due to the ethical factor of the business rather than the legal standpoint. Lawyers know how to navigate all aspects of the trade and quickly get you to where you need to be. But first, the integration will come in handy, as stated above.
This isn’t something that a law firm can help you with, as numbers and goals are usually discussed in executive meetings. This is a sector where the legal department director will be present and develop ideas to help facilitate smooth operations.
There are several areas where a legal department can come in handy in a business. They will be available on call, and they will know the inner workings of the business. This will also be helpful as they help the company to grow.