For companies in technology, life sciences, consumer goods, and other sectors, the new year began with headlines announcing layoffs and reductions-in-force in the double digits.
The shift away from recent boom times and easy money is widespread. Three out of four corporate legal departments are experiencing a strain on “legal department resources, budget and/or capacity,” according to The General Counsel Report 2023. The impacts extend beyond hiring freezes to include putting backfilled positions on ice and deepening oversight of budgets.
Taming the Unknown
Uncertainty is hardly new for legal departments. Managing risk is their core mission. But the challenge of taming the unknown collides with a period of enormous scrutiny of headcounts, legal spend, and profitability.
When looking to rebuild the department, technological innovation can only lift so much, and may even trigger issues elsewhere.
As workplaces adopt biometric, AI, and other efficiency tools, novel complexities around data security and protection arise, keeping the pressure up for GCs around information security.
The pace has quickened, and GCs are expected to “be able to adapt at the drop of a hat,” said Celia Perez, General Counsel & Corporate Secretary of FreightCar America, during a webinar analyzing The General Counsel Report 2023.
Doing Nothing Is Not an Option
“Nearly every conversation I have today with a GC or CLO begins with ‘I need help. Demands on the legal department keep growing, and I just don’t know how to read the market,’” says Tracy Scanlan, Paragon’s VP of Client Development & Legal Affairs.
Scanlan hears from GCs who are stuck between critical projects and goals that support the business and less capacity to achieve them. They say that they are loath to invest time and effort in the FTE hiring process as downward pressure on markets persists.
What certainly will continue is expanded expectations of legal departments. Today, GCs are asked to function like a secretary of state for their CEOs, developing and deploying skills in diplomacy, geopolitics, public health, and emotional intelligence.
Two years ago, Environmental, Social, and Governance (ESG) initiatives did not even rate as a top risk in The General Counsel Report published annually. In 2023, GCs considered ESG a top-five risk they now need to manage.
Additionally, GCs are part of reputational risk management efforts.
Recent layoff announcements have included mea culpas and apologies for overhiring during the pandemic. Says Scanlan, “Hiring reticence is understandable, yet inaction is not really an option when workloads and expectations keep growing.”
Flexibility is key to taming uncertainty, suggests Scanlan. Here are a few options for legal departments rebuilding amid a volatile landscape.
Of course, having a team filled with star players is the dream. Yet the process of hiring a full-time employee has never been more challenging.
The investment of time and money. Identifying and wooing the right candidate. Extensive interview rounds and complex negotiations on the front end. Then comes onboarding, training, and ramp-up time. And should the fit not work, there’s the termination process, severance, and the hit to morale and efficiency on the back end.
Bringing in the right interim attorney can bring legal teams closer to the ideal in an uncertain market.
On-demand options have grown significantly, and legal departments are becoming more creative and receptive on how they fill critical gaps in talent — and meet deadlines.
Consider the experience of one Bay Area tech company. The legal team had to determine several compliance challenges of a national rollout of a new product. The business looked to legal to support a program to build data protection into various phases of product development, which, in turn, could save the company the expense of remediation later.
At one time, the legal team had the bandwidth to deliver the project. But two key team members were out on leave. Product teams were antsy, and department resources stretched to the limit.
The company had instituted a hiring freeze — a new FTE was not an option. Engaging an entourage of attorneys from a costly outside law firm was an expensive option certain to be scrutinized. Instead,we suggested and placed a highly skilled, two-attorney, data security team hired on a project basis.
The Paragon attorneys delivered for the GC.
As privacy specialists deeply emerged in the field and armed with market intelligence and best practices, the Paragon team completed the project quicker than FTEs would have. Furthermore, they raised several unique business-related issues previously unknown to the GC.
Perhaps the most enduring value for our tech client was that the GC found one of the temp attorneys such a strong fit with the department, he later offered her a full-time role with the company.
The temp-to-permanent model is one of several high-value, low-commitment options allowing legal departments to exert flexibility.
Another flexible point for law departments centers around “quiet quitting” and workplace burnout. The stream of staff cuts has resulted in reallocation of work and repurposing of roles. The ubiquitous mantra of “do more with less” seemed to be manageable, at first.
But now we are hearing from GCs that extra burdens add up over time and exhaustion mounts. “Teams that were once robust are beginning to feel overwhelmed. It may take one attorney going on an unexpected leave for the department to reach breaking point,” Scanlan says.
Bringing on an interim attorney to concentrate on the daily workload not only gets the immediate job done. It contributes to a culture of well-being and sends a positive message to current employees before burnout emerges.
General Counsel typically turn to outside law firms for extra depth and expertise in litigation, employment law, intellectual property, and other areas.
With law firms giving themselves healthy rate hikes in 2023, the cost of specialized knowledge has become more expensive.
To access the practice-critical depth needed without the full-freight fare of an outside law firm, GCs are finding great value in Paragon’s model. Many of Paragon’s attorney experts in data security, contracts, and regulatory compliance are veterans of Big Law who opted out of law firm lockstep for the flexibility of Paragon’s model.
The old notion that an interim attorney ‘can’t get a real job’ has never been further from the truth, according to Scanlan. She explains that Paragon supports a vast network of experts in their legal fields; these attorneys’ knowledge and agility are creating great value from GCs without sacrificing quality of work product. Quality assurance starts with Paragon’s highly selective candidate vetting process — fewer than 5% of applicants are accepted.
Hiring caution is an understandable response to uncertainty.
We hear most GCs initially hesitate before exploring the on-demand option because they fear the time and administrative burden required to onboard and train a new person.
It’s too easy for a CLO to think it would be quicker to do the work themselves, but it’s a false economy. Spending time on lower-level tasks diverts leaders from the strategic work that is their true calling. Taking on that extra burden in the name of economizing today may carry a surprise price tag tomorrow.
One biotech company CLO was in that exact position when she came to us.
Her contract team was short-staffed, the search for a FTE stalled, and the department under pressure to expedite the contract approval process for a new product line.
Following a brief but insightful conversation with the CLO, we identified a few commercial attorneys who could turn the situation around. Once the CLO selected their ideal candidate, we streamlined the onboarding process by leveraging our knowledge of the many systems used by legal departments.
Rebuilding teams to meet company missions in this turbulent era is likely to be an incremental process undertaken carefully. Those who opt for stasis over taking the first step may find themselves in a struggle to stay valuable, competitive, and relevant.
Looking for new options to rebuild the team? Have a critical project due soon? Contact us to find out how Paragon attorneys can add peace of mind in an uncertain market.
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