All you need to know about the legal department

The legal department occupies an increasingly strategic position in companies. A study by the Cercle Montesquieu and the AFJE conducted in 2021, shows that 3 out of 4 legal directors are now involved in the management and executive committees of their company. 

So who works in the legal department in a company? What is their field of action or their responsibilities? What are the challenges faced by legal departments today, particularly in the modernization of their tools? Hyperlex, the SaaS contract management software designed for legal departments, tells you all about it.

Legal department, definition

The legal department plays a key role in a company. It is mainly composed of lawyers, i.e. legal specialists who can be compared to company "lawyers". 

Medium and large companies benefit from having a legal department to protect their interests. Smaller companies such as start-ups usually hire lawyers when necessary.  

The legal departments are responsible for the proper functioning of the company, from a legal point of view. In particular, they are responsible for ensuring that the appropriate regulations and standards are applied and updated in both internal and external relations. This requires daily legal monitoring and expert knowledge of the issues involved. 

Increasingly, the legal department is also required to manage data protection and compliance issues.

Finally, he occupies a strategic position in terms of consulting. Indeed, his role is to share his expertise and defend the interests of the company during projects, negotiations or even in management committee.

In short, the legal department is the guardian of the company's proper operation in the eyes of the law. ⚖️

The responsibilities of the legal department

Regardless of its sector of activity, the legal department is consulted for all important decisions of a company. Whether it is a recruitment, a new supplier contract, a commercial contract, the development of a new product or a new service... no contract can be written or even concluded without the participation - and the responsibility - of the legal department.

Thanks to its mastery of national and European directives, laws and decrees in force, the legal department indicates the steps to be taken, both for compliance purposes and to control risks.

    Here are the areas in which the legal departments are involved: 

    🗂️ O rganization: lawyers ensure best practices in the event of a merger, acquisition or disposal of a company;

    💙 Core business: Lawyers must be familiar with the rules applicable to the company's sector, whether it be health standards or intellectual property issues;

    👩💻 Job market: the lawyers manage the contracts between the company and the employee;

    🛡️ The relationship with the client: the lawyers ensure the proper compliance with the RGPD laws, especially in the protection of personal data;

    🤝 Business development: lawyers intervene in negotiations to verify the compliance of contracts that bind the company to the new client.

    Legal and contracts department

    As we have seen, the legal department is involved in all stages of the contract life cycle and is responsible for the organization and proper execution of these documents. 

    The contract is the most important component in the business of legal departments. It represents a strategic asset and includes a multitude of decisive data, such as dates, clauses, amounts...

    No contract = no law enforcement = no company. 🙁

    But then what is a contract? 🤔

    According to vie-publique.fra contract is "a commitment or an agreement that creates obligations between two or more persons".

    Managing contracts is the mission of legal departments, and it is a real science! It requires smooth organization, especially when the average number of contracts a company has to manage is estimated at between 20,000 and 40,000, according to the consulting firm PwC.

    💡 Did you know?

    According to a 2019 Deloitte Taj study, 52% of companies did not know the expiration date of their contracts.

    This is serious! The financial and legal risks are multiple with a bad management of contracts. That's right, poor management can lead to a drop in sales of about 10% for a company, according to the IACCM.

    7 reasons to digitize a legal department with a CLM

    According to a Wolters Kluwer study conducted in 2022, nine out of ten legal departments use legal software solutions on a daily basis. This digitalization or digital transformation of legal departments is a strategic lever for companies.

    It consists in transforming the working methods and tools of legal departments to save time on their high value-added tasks.

    Among the tools that help optimize the daily life of legal departments, there is contract management software, called CLM (Contract Lifecycle Management). These allow them to take control of their key data: the contract. 

    In addition to controlling financial, operational and regulatory risks, these solutions also improve efficiency, reduce administrative burdens and shorten contract cycles. 

    How to digitize a legal department

    Equipping a legal department with a contract management solution will have an impact on the entire company. 

    However, budgets are not always allocated to equip legal departments. 

    This is a strategic mistake! Because before being a digital transformation, adopting a Contract Management solution is above all a change of mindset that impacts the entire company.

    It is not only a question of mastering a software but of integrating it into one's daily life and adapting the new practices that result from it.

    Here are the steps to follow if you want to digitize a legal department in the best conditions by choosing the solution best suited to your needs: 

    #1 Identify needs ✅

    Start by taking stock of how your legal department operates. This will make it easier to identify the various problems encountered. 

    ⚠️ Don't forget to ask for input from your collaborators to ensure that a broader scope of needs is identified.

    From there, it will be possible to define new objectives and KPIS.

    What is a Legal KPI? Answer a little further down... 👇

    #2 Structure the project 📊

    Once you have defined your objectives, it is important to prioritize your actions!

    What are the next steps to take? Who can do it? Yes, it will be important to assign roles within the team to make the project flow.

    Once everyone is on the same page, it will be necessary to draw up the specifications and start the third phase of this digitalization project.

    #3 Benchmark solutions 📃

    It is impossible to know all the legaltechs that offer a contract management solution. To find the one that best suits your structure and organization, it is important to launch a benchmark.

    You should take advantage of this benchmark to ask for demonstrations of these solutions and ask questions. It's easier to project yourself. 

    #4 Defend your project internally 🤏

    In order to overcome the cost barrier of implementing a CLM, it is necessary to demonstrate the promised benefits to the hierarchy, in particular thanks to the KPIs defined upstream.

    Two arguments in your favor: 

    25% of legal departments have seen a wider approval of their digital budgets. 2022 Legal Departments on the Move? Wolters Kluwer, European Company Lawyers Association, 2022

    92% of DJs have initiated or strengthened a digital transformation project for their work methods (compared to 75% in 2018) (mapping of legal departments)

    What are the KPIs of the legal department?

    The legal KPIs can be grouped into 4 main families: 

    speed, volume, cost or satisfaction KPIs.

    These change from one legal department to another...

    Here are some examples of KPIs that can be useful to observe to help with the implementation of a digitalization tool:

    • Litigation settled, won or lost, as well as their amount,
    • the type and number of files processed, 
    • the departments that make the most use of the legal department, 
    • the budget of the legal department compared to the company's turnover,
    • the turnover of the members of the legal department,
    • the average time to answer questions ...

    Anything that constitutes data is extremely important! On the one hand, it can tip the scales in favor of the legal department during negotiations with management, and on the other hand, this data can make it possible to become aware of improvements to be made in the general organization of the department, beyond the implementation of a CLM.