28th UK CEO Survey
The 28th Annual PwC CEO Survey reveals a momentous intent - and a pressing need - among UK business leaders to instigate material change to their business models.
Bridging the gap to the c-suite: how legal can transform into a growth enabler with the right strategy and communications
Traditionally, legal departments were seen as a support function to the organisation, primarily focused on mitigating legal risks and ensuring compliance. But PwC’s Transform legal to transform business report highlights a significant opportunity for legal leaders to increase the value their teams add. With 22% of UK and 40% of global chief executives realising an urgent need to transform operations, nearly every organisation is under existential pressure to transform.
For GCs and heads of legal, that offers a chance to change how the department is viewed across the business. It’s a widespread ambition. Half of our surveyed legal leaders harbour ambitions of contributing to business-wide growth and transformation over the next 12 months. And 53% of the C-suite and a third of company secretaries want legal to do the same. That’s because the success of the organisation’s wider transformation plans depends heavily on how legal evolves.
While realising these ambitions requires the right technology, skills and leadership, it also requires the right relationships between the board and the GC. Often, this is where there’s a slight disconnect between the parties. For example, less than one in four in-house legal teams tell us they have made significant progress on transformation, with a perceived lack of budget, cultural resistance to change and limited resources cited as barriers. But, by contrast, 41% of the c-suite and 28% of company secretaries believe legal has made significant progress in this area.
Any disconnect between legal and the rest of the business can lead to missed opportunities and missed value.
“Legal teams can sometimes feel siloed, locked out of structures, and rarely consulted on strategic issues. While all parties should look to resolve this disconnect and unlock the business-wide potential that real change delivers, GCs can proactively earn themselves a seat at the table - by demonstrating strategic thinking, helping rethink risk, and talking the right language to communicate value.”
From risk mitigator to business enabler
A changing regulatory environment coupled with volatile external markets has brought the role of the GC into sharper focus. With legal increasingly consulted on a wide range of business issues, there’s never been a better time for legal to increase its influence across the organisation.
GCs possess a unique perspective that encompasses both legal expertise and an in-depth understanding of the business. Well-versed in regulatory intricacies, being actively involved in strategic discussions at the board level allows them to offer valuable insights into how legal considerations intersect with business objectives. From there, they should be well-equipped to shape an organisation’s strategy from a legally viable standpoint, enabling a more holistic and informed decision-making process.
This reinvention of the GCs role starts with a different approach to risk.
“Building resilience isn’t just about withstanding shocks. It’s about being confident you can progress whatever challenges arise. With their sight across the business, in-house legal teams have an opportunity to move from risk mitigator to proactive risk manager.”
By building strong relationships across the organisation, the GC can collaborate with sales, marketing, and other relevant departments to identify potential legal risks associated with new business opportunities. By conducting thorough risk assessments, the GC can provide a clear picture of any legal implications and solutions, allowing the organisation to make informed decisions on all manner of issues, ranging from evaluating contractual terms and regulatory compliance requirements, to intellectual property concerns and other legal considerations that may impact sales or business actions.
Once risks are identified, legal can add further value by quantifying them in a way that facilitates decision-making. Even a straightforward approach such as categorising risks based on severity and probability of occurrence will help the organisation prioritise and allocate resources accordingly, and help communicate the potential impact to stakeholders, improving transparency and leading to better-informed decision-making and speeding up sales.
In addition to quantifying risks, legal teams can work with relevant departments to develop effective, proactive risk-mitigation strategies. From providing guidance on contract negotiation, or drafting, to training and education on minimising potential legal liabilities, the GC can empower the business to identify and address potential legal risks proactively, not only creating a more risk-responsive organisation, but freeing up their own resources to add value in more strategic areas.
But a truly effective approach to risk and resilience requires a combination of human qualities with the value and speed that technology and data can bring. Human understanding of risks and insights around regulation must be powered by technology, data and analytics to enable smarter decisions, assess opportunities and act quickly in the face of risk. Echoing that sentiment, 44% of legal leaders believe that a tech-led transformation improves the resilience of the entire business.
“When it comes to identifying risk, speed is of the essence. The technology capabilities and insights legal teams now have available to them are really valuable, but it’s up to legal leaders to communicate these insights to the board in the right way. They need to speak the language of the business.”
Balancing strategy and risk as a business partner
Away from risk, GCs can add significant value by proactively identifying and capitalising on opportunities. They must be a business partner rather than the ‘department of no’ they have historically been considered.
By closely monitoring legal and regulatory developments, they can anticipate industry trends and potential disruptions. From there, they should feel empowered to advise the board on emerging markets, new business models, and innovative partnerships, helping the organisation stay at the forefront of developments.
This ability to ‘horizon scan’ can elevate the role of the in-house legal team, and see GCs become catalysts for positive change and growth within the organisation.
But this forward-looking approach must be considered alongside the ‘traditional’ role of risk mitigator. Balancing these sometimes conflicting dynamics will be a crucial aspect of the GC’s role. Doing so is likely to require new skills and a more proactive approach.
GCs must first have a deep understanding of the organisation’s overall goals and direction. To be actively involved in strategic discussions, any legal leader must have a comprehensive understanding of the industry landscape, competitive dynamics, and emerging trends. This requires strong business acumen to effectively contribute as a strategic business partner, including familiarity with key performance indicators, revenue streams, and market dynamics. It essentially requires a GC to be a business person first, and a lawyer second.
Communication is key
Perhaps the biggest challenge for legal teams is their perceived standing within the organisation.
While the GC and the C-suite both have a role to play - and an incentive - in forging closer ties, legal leaders need to get comfortable being bold and talking about strategic issues. They need to demonstrate why they deserve a seat at the top table, using data and insight to show the value that legal brings.
But many still report to the CFO directly rather than the wider board, and often only brief them if there’s a risk. GCs need to change their mindset and approach if they are to truly demonstrate their value organisation-wide.
It begins with how they speak to the organisation.
“GCs don’t need to know how to read a profit and loss statement to demonstrate their value. Everything they do has a financial impact or implication, so they just need to get comfortable articulating that. What they do matters, so it’s important they can showcase it.”
Legal leaders are already great communicators, but they should hone their skills to articulate legal concepts and risks to non-legal stakeholders.
That means setting out information and insight in the appropriate commercial context. For example, the board may not be interested in the efficiencies of contract lifecycle management (CLM) or need to know the technicalities of how it works. What they will be interested in is the financial implications of how CLM has reduced the need to manually produce, review and rework contracts, and the savings that go with it. They are also likely to be interested in how newly adopted tools, faster solutions and a tech-led transformation of legal have made the business more responsive, more competitive and more profitable.
It might also mean simplifying complex legal concepts into more understandable language to allow business leaders to make informed decisions, presenting legal advice less formally, or advocating for risk mitigation strategies that don’t stifle innovation or growth.
Change takes time: act now
In-house legal teams have significant value to add to an organisation. But there’s a change of mindset across the business that needs to happen first.
However, the GC can influence this change by being more proactive and taking certain steps forward. To earn a seat at the top table and transform into an enabler of transformation, they should seize this moment, when so much is being disrupted, to demonstrate value: changing the function, upskilling people, forging links with the c-suite and becoming a proactive driver of growth.
While these changes are unlikely to happen overnight, we’ve worked with a wide range of legal teams to provide them with a managed legal services offering that brings together the expertise of a law firm with powerful technologies and process excellence, to optimise their service while they undergo such a transformation. As a seamless extension of their team, we’ve helped give them access to leading legal technologies and better communicate their value to the organisation in the most effective way, not only empowering them to work on more strategic matters but elevating their role from risk mitigator to business partner.
Get in touch to discuss any of the issues raised in this article. Or to explore further, read our report Transform legal to transform business.
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