A framework for legal issue management – introduction.

Lawyers executing management roles – as General Counsel, Head of Legal or head of a department or division – have no shortage of advice available to them, especially when starting out in a new role.  Some of this advice will come from former or new colleagues; some from law firms; and some from legal writers and commentators.  Most of this advice is tactical in nature – what to do in the first 100 days of a new role; how to manage external lawyers, etc. 

A general counsel will need to guide an organisation through the legal aspects of anything and everything which can happen to an organisation, whether good, bad or deadly.  One way of segmenting these manifold and different issues is to classify them by their discipline (for example, litigation, secretarial, compliance etc.).  This approach can help general counsel decide which of their internal and external resources are most appropriate for the relevant discipline.  But it does not assist the GC in taking a qualitative view of the different facets of their role, by which I mean making enough sense from the noise to work out what needs the GC’s immediate attention and what can be left.  This article is intended to offer a framework for a strategic, qualitative approach for analysing the GC role and so for making decisions around how to execute it, based on my experience of carrying out legal management roles and of advising others who do so.   (For the sake of readability, this article and the three articles it introduces refer to those carrying out legal management roles as general counsel, but they are intended for any in-house lawyer in a management role.)

The starting point for this framework is to look at issues not from a legal disciplinary perspective, but rather from the perspective of the organisation.  Any organisation, on a day-to-day level, has a mixture of activities which cluster around doing the things that the organisation exists to do and those activities which are not directly concerned with the organisation’s purpose, but which happen anyway.  And then there are those one-off activities which may belong to either category, but which stand out because of their scale or other attributes. 

Moving from the organisation’s perspective to the GC’s responsibility, these allow the legal management role to be seen as relating to these three blocks of activity.  The first category, of activities which relate to the things the organisation exists to do, translates in legal terms to activities like customer contracting, oil drilling, provision of public services etc. – “business as usual”.  The second category corresponds to activities such as property transactions, employment law and purchasing, none of which directly relate to the organisation’s raison d’être (unless it is, say, a real estate company in which case property transactions clearly do) – “keeping the lights on”.  The third category – the “one-off” – matters, can relate to either category, but are sufficiently out of the ordinary to require individual treatment.  These may include the issues that define an organisation’s future (or if they go adversely, may see to it that the organisation has no future), sometimes called “bet the farm” or “bet the company” matters, as well as other issues which do not bear the same level of existential threat, but are distinct and front of mind for the organisation’s management team.

This analysis does not set out to be the only way to look at the work which an in-house team carries out.  It is just one lens through which the complicated set of activities and relevant factors can be considered, and other perspectives (including the disciplinary approach referred to above) play an important role.  But it can provide a vantage point from which to survey the in-house legal battlefield and make informed choices about where to deploy resources most effectively by reference to the organisation’s needs and priorities.

A well-managed legal function will bring distinct approaches to these three groups, even if resources are thin, the work seems overwhelming, and the team over-stretched.  In fact when the team is over-stretched by a mismatch between demand and resources, it is more important than ever to keep these three categories of work distinct in the minds of the legal team and especially of the GC, as it will help to shape the allocation of attention and resource between the matters that are under management.

Perhaps the single most important thing to hold onto in relation to this category analysis, is that the categories are not fixed.  While the distinction between the business as usual category and the keeping the lights on category will be clear in the majority of cases, there will be occasions when changes in an organisation’s purpose or markets, or other circumstances, moves an activity from one category to the other. 

Already mentioned is the fact that while, for most companies, real estate transactions are incidental to their main trade or other activity, they become central to purpose for property companies.  So at a company which hitherto has no business in property transactions but then branches out into real estate deals after a change in direction or an acquisition, real estate can move from the second category to the first – at least in part, an observation which leads to a second point. 

Some activities may straddle the categories, so in the real estate example, properties which are bought and sold to generate money for the company will fall into the first category, property acquired for the company’s own use and occupation will remain in the second. 

On occasion, an activity may start life as a keep the lights on type of activity but move to the first category over the course of a period of time.  Purchasing became more central to the IT company I worked for as its business model made the incorporation of products and services from third parties a more significant facet of its customer projects than had been the case when it was more involved in computing design and manufacture.  And as a further example, there are companies which originally held a modest portfolio of intellectual property rights to protect their key technologies, but which then saw the opportunity to make money from these portfolios from licensing opportunities.  The single thread joining these different points is that GCs must stay alive to the subtle changes in how the activities comprised in these categories may change in their organisations’ perspectives over time.  As we will see, the strategic requirements for handling business as usual matters can vary appreciably from the requirements for keeping the lights on matters.

The other category change occurs when an everyday matter – of either business as usual or keeping the lights on category – takes on a wholly greater significance to move into the “one-off” category.  Some of the activities in this category are, from the outset and their very nature, “one-off” – a bribery allegation, a sizeable acquisition, or a critical piece of litigation will clearly call for significant attention straight away.  More difficult to identify are issues that appear to be business as usual or keeping the lights on issues, but which either acquire a scale or other characteristics that mean that they move into this category of significant individual items – a common example being an employment dispute that starts off life as a normal-looking grievance or dismissal, but which metamorphoses into something altogether more significant because of a whistle-blowing or discriminatory dimension, or because it threatens to bring in industrial action from fellow or former workers.   

There are no exact parameters governing the boundary between categories, it is a matter for judgment.  The judgment will be the GC’s if he or she has built a reputation in the organisation for exercising sound judgment over what is of first importance and what is of lesser importance.  It may however be the judgment of the CEO or another senior figure in the organisation; in these cases the GC needs to be in the right side of the line and not be found to have underplayed the significance of an issue and so given it insufficient attention.

The general counsel’s role of course encompasses more than these three categories, which are not designed to manage the internal and external resources of the legal team, or to assist in legal issue horizon-scanning, as just two examples.  But exerting a strategic control over the main types of legal advisory work which the general counsel and team must cover will not only ensure that this work is carried out effectively, but provide more time and thinking space for these other issues.

So – this is a model for treating all legal issues as belonging to one or other of three categories, and for noting how as circumstances change, issues may move from one category to another.  The second part of this article, which will be published separately, looks at some themes and approaches for each of the three categories.