Decentralizing legal departments and embedding lawyers directly into various business units remains a topic of debate among general counsels, according to Axiom’s survey. This notion of embedding lawyers is being pushed by business leaders, CEOs, and others, with the intention of increasing the alignment between the business desires and the legal guidelines. The results suggest that corporate legal departments aren’t necessarily structured to fulfill the business needs of the corporation, creating a potential disconnect.
The Axiom survey was filled out by approximately 300 general counsels and the data proves quite revealing. The majority indicate a considerable willingness for structural changes within their legal departments to better meet the needs of the corporation’s various units. While the preference for a largely centralized setup remains popular, with about 64% of respondents favoring a centralized legal department, there is some interest in decentralized law practices with 15% favouring embedding of lawyers in business units. Furthermore, only a slim 3% sought after a completely centralized arrangement with just 1% leaning towards total decentralization.
The discussion around this issue isn’t a recent one. Nearly thirty years ago, the idea of embedding lawyers into business units was proffered as a potential cost and time saving measure. It was eagerly advocated to ensure faster legal assistance from a legal team that, often, was seen as a roadblock or a source of lengthy legal discussions lacking in strategic legal direction.
The interactions between business professionals and lawyers seem to maintain a constant discord. Business professionals typically desire rapid solutions to urgent problems. They often do not grasp ethical dilemmas or understand the constraints and rules guiding the practice of law. This dissonance could cause tension, especially as legal professionals need to be mindful of the ethical boundaries dictating their conduct, be it advising on legal matters or ensuring legal compliance.
An article shared in Legal Dive commented on the potential issues caused by the silos of business units. It noted that keeping the legal operations under the control of the general counsel optimizes the collaborations between the resources, maintains the highest standards, allows for flexibility, and enables efficiency across units. The question, however, still remains: does the benefit of having embedded lawyers outweigh the risk of becoming advocates rather than objective advisors?
As is often said in the legal world, “It depends”.