Can Law Departments Make Money for Their Company?

A new report discusses how a law department can make money for its company.

Assertion of rights (warranties and other claims) and prevention of wrongs (preventive law) are two ways to protect clients. This report describes one of the two ways. In the assertion mode, there appears to be a metric of "counting" the benefit that lawyers provide to clients. This may be what is needed to persuade management to pay more attention to its legal department.

Yes, the numbers can be significant. In this case (the assertion mode), however, the client must be willing to engage the lawyer/law firm/in-house counsel to be alert to those opportunities. In the latter case, the client must likewise be willing to engage the lawyer to show the client how to negotiate and/or structure customer relationship so that challenges/problems do not arise or at least are minimized.

In both cases, there must be a willingness to include the lawyer in the business process. In the former, we wait for a problem to arise … and then claim credit for a return on the investment in the lawyer. In the latter, we are inserted into the process from the beginning … and the ROI is more difficult to measure. After all, how can you measure or take credit for something that didn’t go wrong in the first place?

Lou Brown was the "father" of preventive law. I "grew up at his knee" and learned a great deal from him. The concept of "preventive law" was a difficult one to "sell" to both clients and lawyers, especially in an era of good times and increasing wealth for lawyers. I suspect it will be a difficult sell even today, despite the even greater need for it. It’s always easier to claim credit and persuade management that the lawyer is an essential part of the recovery process when you can claim credit for the flow of recovery money.

Good work and congratulations to those who prepared this report. Perhaps we will get closer to preventing problems by showing how we can cure problems. I’m not so sure though. This reminds me of the search for cures for lung cancer. The American Lung Association raises a lot of money and makes millions of dollars of grants to research for a cure for lung cancer. Yet, less than 5% of their grants are for behavioral research that prevents smoking, the primary cause of lung cancer. Why cure cancer so patients can go back to smoking, why create a cigarette with fewer carcinogens, when not smoking at all will take care of most of the problems?  Why set patients up so they can return to buying from the tobacco companies?

Seems to me to be the same here.  Warranty work (cure) is important, but better customer relations (prevention) is the better approach.

Categorized in: Management