The way in which external businesses perceive their lawyers and the criteria they use for forming a view on whether the lawyers add value is always interesting but perhaps even more interesting is the view of other senior people in a corporate setting to their in-house lawyers. We think this is so because a business which is of a size which considers an in-house legal function to be important should be perhaps more receptive to the value delivered by lawyers. But maybe not so ?

In a recent survey of businesses with in-house legal, the following findings arose :-

• Commercial skills rather than pure legal skills were considered the biggest important factor in senior management’s perception of the value of the legal team
• A significant proportion of those asked classified  the legal function as adding value but not significant value.
• The cost effectiveness of the legal advice was seen as a big driver for having an in-house team
•  Only 21% of the businesses surveyed seek to measure the performance of their in-house legal function.
• Less tan 50% of the businesses asked consider that external lawyers provide financial value.

As with any survey, mush of course depends on the questions asked. The term “adding value” can be looked at in many ways – does it mean improving profitability or does it mean saving money or reducing risk ? This is always the difficulty for lawyers in that most legal advice is inherently of a defensive, cautionary and risk management nature. Only if the risks materialise does the value sometimes show itself clearly.

Some savvy and progressive lawyers, particularly in the current economic conditions are finding ways to make their clients money by tasks such as contract reviews, looking for ways to renegotiate contracts or extricate from contracts. As these can directly impact profit in a positive way, this is smart thinking.

What do you think about the value proposition debate ?