If you are a corporate lawyer, you know that law departments have been cut back for years. Too often, companies see their in-house counsel as a cost to be managed rather than a source of bottom-line growth. How can you make your department a revenue driver for the business?
Proving Legal Can be a Revenue Driver
At the Association of Corporate Counsel Annual Meeting, hundreds of attendees sought answers to this question at a morning session called Law Department as Profit Center: Strategies for Going from Cost Center to Revenue Generator. The experienced counselors on the panel shared how their companies used litigation related to intellectual property, obligations, torts, and class actions to create revenue-generating programs.
One attorney shared how her business with many hundreds of retail locations combed through contracts to identify ways the business was overpaying, or in which the landlord did not meet its contract terms and therefore could be held to concessions or damages. “Your job is to say yes and partner with the business team”, the litigator said. “I try to brainstorm where there can be recovery in those groups of contracts”.
A former in-house IP attorney pointed out that legal recovery strategies are highly profitable: “It’s huge the amount of impact this money has on the corporation.” But creating the conditions for recoveries with business partners requires adding the most valuable terms at the point of contract initiation.
And a law partner who used to practice in-house discussed the importance of creating a repeatable process that meets enterprise-wide goals, so that thousands of cases can be handled in a more valuable way. “Don’t cast it as a litigation program”, he said, recommending instead to define the new legal process as a revenue program that will get buy-in from business units. “It doesn’t require an army, it doesn’t require a ton of cost, it just requires you being willing to take a swing.”
Contracts: The Common Denominator
These leading corporations all created repeatable, strategic litigation programs to turn their law departments into revenue centers. To do this requires a lot of process maturity—in particular in contracts.
You can’t mine your leases for recovery opportunities unless you can search and report on your contracts – and compare commitments to actual performance as recorded in ERP and other systems. Discovering which legal terms create the best conditions for financial gains takes a sophisticated clause playbook and advanced analytics. Enterprise-wide processes require enterprise-grade workflows and security, so staff costs don’t grow as fast as the recoveries they can create.