Page 17 - CCCA Magazine Winter 2017

{ FeatUre }

“ the more the general counsel
is tuned into the overall
operation… the more likely
UnDerSCorIng ValUe In the FUtUre they are to want to get into a

loss recovery program.”
Nonetheless, there are challenges for law departments that want
to take a more active role in revenue-generating functions. Jay Fastow, Partner, Ballard Spahr
Silvia Hodges Silverstein, Executive Director of the Buying Le-
gal Council, a trade organization for legal procurement, observes
that “this really necessitates a new mindset and new skills.” Affairs and Corporate Secretary at Vancouver-based forestry
“It’s a much more business-oriented approach,” and she frm Canfor Corporation, says that management teams and
questions if legal departments have the right skill set and are boards of directors “are looking to their general counsel to
ready for such a step. do more and develop more in terms of role and responsibility
Schuster agrees that when a legal department becomes re- in the company.”
sponsible for revenue, there is a “change in culture. There are Calabrigo, who is responsible for acquisitions and divesti-
different expectations.” tures, cites M&A as one area where GCs can play a bigger role
Part of the challenge in the whole proft-centre debate is that rev- in revenue generation. Companies analyze their targets and ex-
enue seems to be equated with value, which is only part of the story. pect a certain return and synergies based on fnancial models.
Legal departments are often hard-pressed to quantify their General counsel, he says, need to get involved in that strategy
contribution to the organization. It’s diffcult to measure the and execution because their department will become respon-
value of a compliance program or the early settlement of litiga- sible for “the assumption of risk and all things inherent in that
tion. Revenues, on the other hand, are much more measurable. transaction. You’re creating value when you get involved in
“The easiest way to assess value is money, but that doesn't mean those kinds of transactions.”
it’s the only way,” notes Mark LeBlanc, General Counsel for On- TVO’s LeBlanc has seen the value legal departments bring
tario public broadcaster TVO. when developing revenue-generating business models.
Casey Flaherty, a former in-house lawyer who now works His company is transitioning from a traditional, legacy
with legal departments to help them improve their relationship broadcaster to a digital operator, which means looking at ways
with external counsel, says he is “uncomfortable with this idea to leverage existing assets. One of TVO’s prized assets is its In-
of the law department as a proft centre.” However, he under- dependent Learning Centre, which has interactive educational
stands the attraction of tying value to revenue because the latter programming. Developed for Ontario, it is now taking that
is easy to measure. The current challenge for him is that the key content into the international marketplace, and LeBlanc’s de-
performance indicators (KPIs) that companies rely on to assess partment has been critical to making that happen.
performance don't translate well in a legal department. He says legal departments can no longer afford to ignore the
“How do you map the activities of what the law department revenue equation; instead, they must be “deeply engrained” in
does to the company’s own KPI?” business units as they structure revenue models. “Our role is to
He agrees that you need “to translate as much of what you assist the business unit in trying to build out those new busi-
can do into dollars,” but you also need to bundle your met- ness models.”
rics and KPIs to “tell a story.” Take non-disclosure agreements, When it comes to equating revenue generation with legal
which are de rigueur in most organizations. Shaving off time departments, Sager says, “I don’t believe it’s on everybody’s
to complete them and making them easily accessible to depart- tongue but I think it should be. It’s getting traction.” ❚
ments that need them can have the same impact as revenue gen-
eration because it moves things along faster.
He suggests counsel push back on revenue mandates and Jim Middlemiss is a writer based in London, Ontario.
“try to reframe it. Don't just tell me the law department needs
to show proft, because that doesn't serve anybody. It will create
a lot of perverse incentives. They’re either going to be gaming
the system or taking credit for things that aren't really theirs.”
Like it or not, though, revenue generation and the legal
department is increasingly in the crosshairs of executives,
especially as the role of general counsel expands. David Cal-
abrigo, Senior Vice President, Corporate Development, Legal

Canadian CorPoraTe CoUnseL assoCiaTion | CCCa-aCCje.orG 17