Originally published by the Legal Executive Institute.
My last post was an introduction in ways to change the conversation from in-house legal departments being cost centers to instead, being centers for recovering revenue for their companies. Now, the question may be why you would want to change the conversation in the first place.
After all, in-house legal counsel’s primary responsibility is to make sure that a company’s revenue isn’t depleted through lawsuits, bad contract terms or failed deals. With shrinking budgets, increasing regulatory compliance and complexity, and the ever-present manta of “do more with less,” who has the time or energy to take on the challenge of finding ways to generate revenue for the company?
Let me suggest that an in-house revenue recovery program is a great way to “do more with less”, while allowing you to strengthen your relationships with your clients, ease budget pressures and increase the stature of the legal department within the C-suite. And while you’re at it, you might also help to raise your own profile in the company and show that in-house lawyers are not cost centers at all, but can be revenue protectors and generators.
Let’s look at each of these reasons in more detail:
- “Doing more with less” — Starting a revenue recovery program is certainly more than what most of your clients would expect from their lawyers. And, as you will see throughout the course of my future blog posts, there are recoveries to be had that can be done for relatively little in the way of resources and which can return multiples on the investments made to achieve those recoveries.
- Strengthening client relationships — Efforts made to recover revenue can demonstrate to your clients that you are looking for ways to help them add to their top lines while also deepening your understanding of their business lines, key relationships and the mix of products and services that make up their revenue streams. Not only will this process allow you to work with your clients directly on a specific revenue recovery strategy, but it will give you better visibility to see where their business is heading and help protect it against future problems and pitfalls.
- Easing budget pressures — When the legal department can show it helped bring in revenue for the company in the prior year, it will be in a better position when discussions occur about that proposed increase to the department budget (or, avoiding the dreaded budget ax). Your in-house colleagues and general counsel will thank you, believe me.
- Increasing the stature of the legal department — Some of your clients may continue to view the legal department as a cost center or a roadblock to completing their deals. Finding a way to bring in revenue can be one of the surest and quickest ways to counter those sentiments. And beyond fuzzy and soft metrics relating to losses prevented or early resolutions of problems, the legal department will be able to point to quantifiable amounts that would not have been collected but for the department’s actions.
- Raising your own profile — All of the benefits noted above can contribute to your clients, your in-house colleagues, and even the company’s General Counsel or other C-Suite executives noticing that you are proactively taking steps to find ways to help the company grow its revenue. Rather than reacting to the filing of a lawsuit or being requested to review and approve a contract, you are taking the initiative, which shows you are thinking about the broader company and not just your narrow slice of it.
These are identifiable benefits to the company and make a strong case that you, and the legal department overall should consider starting a revenue recovery program. In the next several blog posts, I will discuss some of the concrete steps necessary to do so. (And please share with me your experiences with your revenue recovery efforts, so that I can share them with other readers who can benefit from your knowledge and experience.)