With how quickly businesses need to shift today, leadership teams are leaning on their legal counsel more than ever before—and expectations are changing. In-house counsel is now expected to take on a strategic role in operations, business strategy, compliance, and more.¹

How might these shifting responsibilities impact a business’s in-house legal department structure?

In short, the tried-and-true, cookie-cutter structures of the past aren’t always well-suited to today’s changing roles for in-house counsel. So, business owners and corporate legal department leaders have to respond accordingly. 

In this guide, we’ll explore key considerations for businesses building (or overhauling) their in-house legal department structure to help today’s strategists cultivate effective counsel systems.

Strategic Framework for In-House Legal Department

No matter which in-house legal department structure you choose (we’ll touch on a few existing models below), your leadership should have one clear goal: aligning your legal strategy with your corporate strategy. 

There are three main approaches today’s companies use to accomplish this goal.²

Functional (Centralized) Structures

Functional (also called centralized) legal department structures are:

• Located under one “roof” (i.e., supervised by one general counsel)
• Governed by one budget
• Divided into sub-departments or teams based on specialty

Generally speaking, there are two key criteria business leaders can use to assess the effectiveness of a specific legal structure:

1. Agility – How well does a legal support team respond to crises and proactively prevent them? 

2. Responsiveness – How quickly can a legal team create and execute an action plan when needed?

Functionally structured legal departments can be particularly agile because of everyday proximity. When lawyers work together in the same facility (or on the same remote, collaborative team) every day, these familiar working relationships can streamline strategic communication. 

Additionally, centralized teams may be able to communicate faster than their decentralized counterparts. 

Hybrid Structures

Of course, each of the above structures represents an extreme—businesses can also combine elements from these to curate a bespoke, hybrid approach to in-house legal department structure.

That could look like:

• Individual department attorneys that answer to a centralized legal team instead of a department head

• Centralized teams with assigned specialists to manage department-specific challenges as they arise

• Attorneys working in various physical locations (or that work 100% remotely) that still operate on functional structure principles (e.g., under one budget or one GC)

The agility and responsiveness of a hybrid model depend on various factors, such as communication SOPs, in-person vs. remote work models, team size, and more. 

It’s also important to note that these structures can adapt to changing business strategies over time—brands aren’t locked into the legal department structure they chose on Day 1.

Client-Focused (Decentralized) Structures

Although less common, some companies utilize client-focused (or decentralized) structures. These legal teams may be:

• Spread out across multiple physical locations
• Overseen by supervisors of other departments
• Beholden to the budgets of other departments

In terms of agility, client-focused teams may bring more specialized expertise to the table when it’s time to strategize company-wide. Since they have an intimate understanding of multiple facets of a company, these types of teams may be able to create more well-rounded approaches to challenges. 

Innovative Structuring for Enhanced Performance

Before making any changes to your legal department structure, assess your current team’s performance. Identifying GC strengths can help you hone and leverage them in your new structure; pinpointing weaknesses can help you curate a strategy that’s responsive to recurrent challenges. 

How can C-suites measure legal team performance? By assessing measurable KPIs like:

• Response times – Tracking response times (to everything from day-to-day communications to crisis alerts) can help you gauge both agility and communication efficiency. 

• Cost efficiency – How much does your legal department currently cost you? How does that spend compare to outside counsel or consultant cost? Does your legal team contribute to cost-saving efforts (like risk management and tax liability)? Depending on your specific business model, you may have to find creative ways to assess your legal department’s value vs. its cost.

• Stakeholder satisfaction – At the end of the day, does the C-suite, BOD, and ownership team feel that the legal team is effective? Since these high-ranking teammates have a thousand-yard view of company success, they’re poised to comment on perceived overall performance. 

Integration of Legal Functions with Business Operations

As you refine or restructure your in-house legal department, the challenge we discussed at the beginning of this guide should be your North Star: leveraging GCs for legal and strategic enterprise functions. 

There are a few strategies business leaders can use to accomplish this:

• Strategic collaboration – To align your legal strategy with your business goals, consider including in-house counsel in strategy and development conversations. This will certainly streamline communications with your legal team, but it will also vastly improve efficiency. Counsel can comment on prospective strategies during the planning process to ensure compliance, sustainability, streamlined implementation, and more.³

• Specialized recruiting – As you work to curate a legal team with strategic savvy, you may need to add lawyers with more specialized skills to your roster. Consider recruiting counsel with training in business law, merger and acquisition expertise, or corporate governance chops.

• Committees – Depending on the size of your company, a committee approach could help you assess the current alignment between your legal and enterprise functions. Consider appointing a representative from each relevant department (e.g., legal, finance, R&D, and HR) to form an exploratory committee. This group could gather information, draft structural changes, and more.

Marrying your legal and strategic functions is all about developing shared objectives and including GCs in the corporate decision-making process. The tactics above are just a few paths you can forge in pursuit of these goals. 

Optimizing Legal Operations for Strategic Advantage

Developing a corporate legal department with strategic prowess is just the beginning. In order to get ahead of competitors, companies must also optimize their legal support systems. Luckily, numerous emerging legal technology can help:

• AI – From using generative AI to write memos and briefs more efficiently to using algorithms to assess large datasets, there is a bevy of AI applications in the law field that can help your law department stay on the cutting edge.⁴

• Machine learning—A subset of AI, machine learning combines automated functions with human input to improve functionality over time. Since legal work is generally highly hands-on, investing in machine learning could help businesses extract more value from everyday legal functions.

• Legal tech software – There is a wide variety of software suites on the market that help legal teams manage everything from company-wide communication to litigation processes and more. 

However, it’s important for GCs to keep their fingers on the pulse of regulatory changes regarding business innovations like AI and machine learning. Again, this is an opportunity to stay ahead of the curve. Staying as up-to-date as possible on emerging legal technology (and the policies that regulate their use) can help legal departments stay compliant while maintaining competitive advantages.

Leadership and Talent Management in Sophisticated Legal Departments

To craft the crack legal teams of tomorrow, GCs and executives need to invest in three best practices:

1. Recruitment – In a legal landscape with increasing strategic demands, you might need new talent to contribute to your company’s knowledge base. The best approach to recruitment is to lean on your resources—your internal team’s networks and outside recruitment support.

2. Development – For both new recruits and company veterans, development isn’t just the key to long-term business success; it’s also part and parcel of retention. Statistics show that employees with professional development and career growth opportunities stay in positions for longer and are more productive overall.⁵

3. Retention – In addition to expanding GCs’ development opportunities, maintaining competitive salary packages and rewarding achievements are just a few strategies leadership teams can use to keep their legal staff long-term.⁶ Discover more tips on how to retain legal talent.

The Future of Sophisticated In-House Legal Departments

Today’s companies don’t just have to build the legal teams of tomorrow—they have to lay the groundwork for legal departments that will still be thriving in ten years’ time. Familiarity with potential long-term challenges for in-house counsel is a must:

• Globalization – Law experts theorize that international borders are no longer the limiting factor behind global commerce—policies and regulations are.⁷ Thus, today’s corporate lawyers may be poised to play a new role in exploring international business growth opportunities. 

• Digital transformation – As new legal tech emerges, so do new challenges. Throughout the next decade, in-house legal teams will need to navigate regulatory compliance, ethical tech applications, and so much more.

• Regulatory complexities – The only constant on the regulatory front is change—regulations are in constant flux, and that’s likely to remain a reality for GCs.

How can today’s businesses maintain resilience, adaptability, and competitiveness in the face of these emerging challenges? By taking a proactive approach to legal department structuring instead of a reactive one. 

Assess your team’s efficacy regularly, check in with your talent to support retention, and make efforts to identify new strategic opportunities for your legal team—these are the keys to ever-evolving industry dominance. 

Building a Legal Team Built for Today’s Challenges

In-house legal department structure is a broad topic, but it’s one that could make or break your legal team’s effectiveness. Identifying new strategic opportunities, leveraging digital tools, building teams with longevity, and taking a proactive approach to legal team organization can all help your business thrive amid changing market conditions. 

And when it’s time to recruit your next generation of legal talent, turn to E.P. Dine—the legal recruiters making it easier than ever to craft exceptional GC teams. We’ve been an expert voice in the legal recruiting space since 1975, but our insights and expertise are evergreen. 

Get in touch to start your next recruiting effort now.

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Sources: 

1. LexisNexis. Corporate Legal Trends for GCs to Monitor in 2024. https://www.lexisnexis.com/community/insights/legal/b/thought-leadership/posts/corporate-legal-trends-for-gcs-to-monitor-in-2024 
2. Docket. Structuring Your Legal Department. https://docket.acc.com/structuring-your-law-department 
3. Forbes. 3 Reasons Why General Counsel Are Enterprise Strategy Assets. https://www.forbes.com/sites/markcohen1/2024/02/05/3-reasons-why-general-counsel-are-enterprise-strategy-assets/?sh=61a9d2bb16f4 
4. Bloomberg Law. AI Tools for Legal Professionals. https://pro.bloomberglaw.com/insights/technology/ai-in-legal-practice-explained/#what-is-artificial-intelligence 
5. ClearCompany. 27 Surprising Employee Development Statistics You Haven’t Heard Of. https://blog.clearcompany.com/27-surprising-employee-development-statistics-you-dont-know 
6. LinkedIn. Breaking the Cycle: Strategies for Retaining Legal Talent in Your Firm. https://www.linkedin.com/pulse/breaking-cycle-strategies-retaining-legal-talent-your-slaughter-pahte 
7. PennCarey Law. The Future of Globalization. https://www.law.upenn.edu/live/news/16024-the-future-of-globalization