A strong relationship between business teams and legal enables a company to steer towards success. Yet, despite their indispensable roles, there often lies an unspoken divide between the legal champions and their business counterparts.
The question persists: why do misunderstandings or apprehensions frequently arise between legal and business?
We spoke to a myriad of seasoned GCs and Heads of Legal to understand this disconnect, and in this blog post, we’re going to take you through their invaluable insights into the underlying dynamics shaping the alliance between legal and business.
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Why the legal-business relationship is broken for so many businesses and how to fix it
The strained dynamic between legal and business often stems from various factors, including misconceptions, communication challenges, and divergent objectives and priorities.
#1 Addressing misconceptions and stereotypes
One of the primary reasons for the friction between legal and business teams is the presence of misconceptions and stereotypes that each side holds about the other. These misconceptions can lead to an atmosphere of distrust and prevent open and honest communication.
Adam Glick, ex-Head of Legal, Intercom, explains,
“Some companies just think of legal as a bit of a blocker, but we're quite the enabler if we do it right.”
Legal is perceived as "deal breakers"—business teams may view legal professionals as excessively risk-averse, always pointing out potential issues without offering practical solutions.
This is where Jonathan Franz’s advice can come in handy. The Head of Legal at Crunchbase says,
“To me, a risk only matters if it's material. If it’s immaterial, I don’t care about it. If it's likely to occur but it's not very costly, I probably don't care. If it's unlikely to occur but, man, if that meteor hit the earth today, it would be bad—I also don't care. It's just not likely to happen.”
Moreover, it’s important to know when to say no or figure out a way to say no without sounding like a team that ends up being a blocker.
For instance, when a customer-facing team member wants to close a deal as soon as possible, but your team finds some critical issues while conducting a diligence check, don’t outrightly reject the transaction. Sandeep Chowdhury, Group GC at HCC Ltd., suggests an alternative way of saying no.
“In such cases, the legal team should not say ‘no, the transaction can’t happen.’ Rather, they should explore ways wherein the customer-facing team member could approach the transaction in a way that does not break any laws. Once the legal team makes the transaction happen by finding a workaround, the notion of them not being approachable will fundamentally change.”
No business acumen
Oftentimes, business teams might also assume that legal professionals lack a comprehensive understanding of the company's commercial objectives.
To eliminate this misunderstanding, Sandeep suggests getting involved with business stakeholders to understand business strategy.
Drawing from his own experience, Sandeep says,
“While I have a seat at the table in all meetings with the upper management where key strategies are discussed, I encourage my team members to have 1:1 sessions with team leaders from other business units at their level. This way, they can contribute more to business operations, and the company will, consequently, be more legally compliant on a granular level.
By doing 1:1s with stakeholders, my team members not only get familiar with short-term and long-term business objectives but also take progressive steps toward accomplishing those objectives. The business grows, of course, but at the same time, my team members grow in confidence when they see how their contributions have bolstered the revenue stream of the company.”
Plus, when you’re communicating with other teams, you need to speak their language, instead of legal jargon. The moment you bring up legal terminology, other teams lose interest in what you’re saying and you end up being viewed as a dealbreaker.
Sandeep stresses upon using the language of business. He says,
“For legal GCs, everything is either in black or white, and they do not try to explain why a proposed roadmap or transaction might not happen. But, a business GC understands the nuances of the business and communicates solutions in a language that most stakeholders understand - business rationale (numbers, metrics, etc.).”
Along similar lines, Ryan Nier, General Counsel at Pinwheel, says,
“Even though you’re from legal, you can't speak legal jargon in meetings. Translate your legal opinion to an easy-to-understand business rationale. And for this, legal counsel needs to learn relevant business terms and KPIs. Translate into their terms, not just yours.”
#2 Dealing with communication challenges
Inadequate communication is a major obstacle to effective collaboration between legal and business teams. Both teams feel that the other is not clear in the way they communicate their struggles or even feedback.
To foster a successful and productive partnership between business and legal, it’s important to openly communicate, become vulnerable, and establish human connections, suggests Celaena Powder, VP of Legal, Seismic.
“My advice for any executive or department is to take off the boxing gloves, be human, and have a conversation. Find out what’s not clicking and understand each other’s goals. Understand the tradeoffs that everyone has made. Have that relationship where you can walk up to any department and ask them questions about things you don’t understand. Ask them to explain it to you like you’re fifteen.”
Addressing communication challenges involves engaging in regular meetings and open forums with business teams to discuss ongoing projects and initiatives. Establishing clear communication channels and encouraging active listening can enhance understanding and cooperation.
“My advice is to understand which stakeholders you’ll have maximum friction with and then adjust and lean in. Try to align the legal roadmap with their goals. In case of conflicts, make sure you’re both seeing it as a partnership. Help them understand and navigate legal risks. Also, make sure they feel educated and comfortable in making decisions (or, if they’re not the decision maker, help them resolve and get to YES).”
You must also keep track of how your team is performing in terms of enabling this collaboration between legal and business teams.
Ryan does it wonderfully; he solicits feedback and conducts anonymous surveys, asking questions like,
“How was that meeting for you? What did we do well? Where can we be better?
He also tracks engagement scores.
“Engagement scores represent how a team member engages or collaborates with cross-functional teams, how much they believe they can grow in the role, and how satisfied they are at work and with me. I hold myself to a high standard: I have a personal KPI of keeping engagement scores at 90%. That’s always a challenge.”
Sometimes, communication challenges also arise from the fact that legal teams are sometimes brought into the decision-making process too late, limiting their ability to influence strategies effectively.
Ken Priore, ex-Director of Privacy, Atlassian, says that one of his primary frustrations is exactly this. He expresses,
“Often, you'll be brought late into a product cycle and there’s very limited time for you to prepare legal advice. And the reality is that your company is launching the product; you just have to make the best decision or give out the best guidance you can with the best information you have.”
Such last-minute decisions often lead to a haphazard functioning of the legal team. So, ask your business teams to involve you at an early stage so you can make decisions with a full understanding of the situation, avoiding misunderstandings and miscommunication.
Finally, Jonathan suggests investing in a CLM tool to foster collaboration between business and legal. He shares his experience of using the tool, saying,
“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth. We have a whole intranet with resources and a legal services request form with 10 different questions so we get all the information upfront and don't have to go back to ask follow up questions.”
Also read: The Basics of Contract Management Software
#3 Aligning with business objectives and priorities
The misalignment of objectives and priorities can create significant tension between legal and business teams.
While the business team focuses on growth, innovation, and revenue generation, the legal team is more concerned with risk mitigation, compliance, and protecting the company's interests.
These conflicting priorities can lead to clashes and a lack of consensus on critical decisions.
“At the end of the day, we want to see the right outcome for the business. There are a couple of ways to get there, and we should decide based on our business, our talent, our current resourcing, our current experience, which way we want to skin the cat. Assess these aspects carefully to figure out who's going to take the lead on a certain area of responsibility and who's going to follow. But those should be outcome-based decisions rather than ownership-based decisions,” suggests Megan Niedermeyer, CLO at Apollo.io.
Legal teams must also take it upon themselves to become business partners rather than a team that works in silos.
Megan stresses on this:
“Legal should be pushing businesses forward, not just receiving tasks. So, if a legal team doesn't equally view themselves as part of the business, actively making business decisions along with the marketing, product, and finance teams, then the symbiotic relationship between legal and business is lost. And I question really the value of legal over the long term of a company unless I can propel it differently than it's operating today.”
Doug Luftman, ex-DGC of DocuSign, made similar suggestions. He said,
“Over my career, I've seen areas—whether it's new product introduction, advancement into new countries, or other operational processes—that have no direct connection to legal roles; but to get to the legal advice, you need to involve yourself in the business strategy and the decision-making process, as well as the process of implementing that strategy.”
“The first thing is to make sure you delve deeper into the business and the product. And then understand the strategic initiatives for the business. What is the business trying to accomplish? What are their goals, objectives over the next two quarters, four quarters, or six quarters? You can then focus your efforts and energies on ensuring that you're helping move the company forward with those objectives and goals.”
#4 Eliminating the lack of trust
One of the proven ways that legal teams have been able to work shoulder-to-shoulder with other business teams is by establishing trust with them.
How? By showcasing the value of legal with the help of data and metrics.
Adam stressed on the importance of showcasing legal’s value,
“Most people think that the role of a legal department is to negotiate contracts and reduce risk to the business. But we have a much greater charter, and educating the business on our role is critical to our success.”
According to David Lancelot, ex-VP Global Head of Legal, eBay Classifieds, proving this value is no rocket science; you need to simply gather data on how your team is helping the business maximize revenue.
“I would build trust with the CFO through quantitative metrics after trying to understand what was moving the needle for the business. In a lot of cases, it was contracts. To gain the trust, it was important to track how effectively and quickly we were helping the business close deals without wasting time NDAs, MSAs, and other repeatable stuff.”
David suggests working on extracting data on legal spend and expressing in a graphical form how it compares to business revenue.
“The one metric that I love is legal spend over time versus revenue. The spend may go up, but it won't go up nearly as fast as revenue. Finding a group of companies, getting the data on who works there, how much they spend on external counsel, lawyers per billion, etc., is a difficult task. But once you put that hard work in, you can show your legal leaders what your total legal spend versus revenue over time versus benchmarks was. That's the kind of thing that makes your CFO smile.”
At the same time, Doug suggests that it’s equally important to recognize the inhibitions other teams may have while interacting with you for the first time.
“The first step to building trust with cross-functional teams, from senior executives to your peers to more junior individuals, is recognizing that not everyone has interacted with a lawyer in the past. Or if they have in the past, they may not have had the most positive experience.”
Business teams often don’t understand the value that an in-house legal team brings to the table — and it’s up to you to educate them and showcase your impact in their language.
“The biggest compliment someone on my team got at one point was, ‘Why do we have a lawyer at this meeting?’ And that opened up the opportunity for them to say, ‘Well, I'm a product attorney. And I'm here because, to give you product legal advice, I need to understand the product, the technology, the roadmap, the ecosystem, and everything else.’ It provided that opportunity to explain the role, how they're curious about what's going on and, most importantly, that they care about what the client or business partner is doing,” says Doug.
Once this trust is established, you can easily have meaningful conversations with business leaders about anything from resource management to legal’s contribution in business strategy.
Uncover the untapped potential
A collaborative legal-business relationship has transformative outcomes that propel a company towards unprecedented success.
With the tips and best practices from GCs at your fingertips, you are now equipped to harmonize the relationship between business and legal and enable collaboration.
To make it easier, try SpotDraft. It enables real-time collaboration; you can collaborate with internal stakeholders and get approvals, and leave comments for yourself, your team, and counterparties. You can also download versions with just the comments you need.