Trust the process: how in-house legal teams can manage organisational change

Rachel MacFarlane, group head of legal at Quintet Private Bank explains how In-house legal teams can harness and drive forward changes in their organisations.

In all organisations there will be, to some degree, change being implemented.

This may be a strategic M&A project or, on the smaller scale, a new system or process being onboarded.

The involvement of the legal team in managing and implementing change depends on the type of change and the perception and role of the legal team within the organisation.

This article sets out, in my experience, why and how in-house legal teams should be involved in the topic of managing organisational change, both benefiting the organisation and the legal team.

I have been in my current role, as group head of legal of Quintet Private Bank for the last two years and most aspects of the organisation are going through a significant transformation.

I've had to be able to understand and effectively contribute to a number of change projects, all happening concurrently.

From the legal team’s perspective, with the organisational change in mind, I've also designed and implemented a new target operating model for the legal team, closely aligned to the organisational change and strategy.

Here are some initial thoughts, ahead of the In House Division Law Society event on 23 May 2022, where I will be speaking at the panel event about managing change.

Organisational change impacts on the legal team

An organisation implementing large scale change, such as structural change, will probably have a project set up, with a sponsor and a project manager.

In particular for large scale change projects, it's important that the head of the legal team is aware of a change project being initiated, as it could impact the team directly.

For example, the group structure is changing and therefore there may no longer be a need for a lawyer in a specific jurisdiction, or the product range is changing, so the technical expertise of the lawyers requires reviewing.

If the head of the team is aware of the planned change, as well as contributing to the project, as set out below, the head can also consider the change in their own budget planning. This demonstrates that the team understands its role in the organisation and is able to adapt to organisational change effectively.

This is important, not just for a particular change project but, for an overall understanding of the change plan and the ‘life cycle of the organisation’. Is the organisation in an acquisitive or a consolidation period, or is an initial public offering being considered?

The reason why this is important is so that the legal advice can be tailored accordingly and be relevant to the organisation at that time. This is different to delivering legal advice with knowledge of the risk appetite.

The role of the legal team

Legal teams have a vital role to play when organisations are going through significant transformation or change. A number of stakeholders may believe that lawyers should only be engaged to do what they perceive is legal work, for example reviewing a third party supplier contract.

Whereas, when it comes to implementing change, the skills in-house lawyers possess, in particular due to the nature of the helicopter view required to excel, enables them to understand the impact on numerous business areas.

After becoming aware of the planned change, the major input required from the legal team is to review it and consider what legal risks the change itself poses to the organisation. This role is broader than just performing a task of “pure legal work”, as referred to above.

Legal teams should be involved in reviewing the change project plan to ensure the legal risks (and mitigants) are identified during both phases of the transition and implementation.

Legal advice may also be required as to impact on employees, third parties, customers, shareholders, the market and the regulator.

Instruction of any required external legal advice should only be sought by the in-house legal team to also minimise legal risk.

The importance of timing

The project team may have already reached out to the legal team for legal advice on a specific aspect, however, the timing of the involvement of the legal team, is vital in minimising legal risk to the organisation.

For example, if the change has already been agreed by a decision making body and the project has started before the legal team is engaged, some key items potentially posing a legal risk may have been overlooked.

In addition to legal risk, if external legal advice is required and if the budget for this cost has not been included, or not included correctly, in the overall cost/benefit analysis, then this may lead to delays and increased costs.

Five strategies to contribute effectively to organisational change

In order to be effective in contributing to change within your organisation, here are five key strategies to consider:

  1. understand the impact of the change and consider the legal risks across the project and not just reviewing what a project team has pre-assigned to the legal team
  2. be aware of the organisational structure and decision making bodies when changes are considered and agreed, so your voice can be included at the outset and legal advice is sought at the right time
  3. use your knowledge of the change programme across the organisation to ensure your budgeting exercise of the legal team (people and external legal spend) is tailored accordingly
  4. be curious and ask questions, and
  5. ensure you are clear on your role within a change programme so you do not end up project managing the change

Finally, look out for me at the Law Society’s In-House Division Annual Conference. I'll be exploring this topic more broadly and will be available to answer your questions.

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