The Billion-Dollar Treasure Buried in the Legal Department
Legal is a rich asset with a huge opportunity to add value to the enterprise on many levels.
October 28, 2021 at 12:03 PM
5 minute read
General Counsel and In House Counsel
"I just want a lawyer when I need a lawyer," said a CEO, who was interviewing a candidate for General Counsel. In only a few words, this statement goes a long way to explain why the law department is one of the last business units to adopt digital in a meaningful way. It's indicative of how some CEOs still see Legal as transactional—not transformational. We talk about how GCs need to adopt a more business-minded posture to propel digital initiatives. However, the onus is also on the C-Suite to view GCs as more than lawyers at their beck and call, but as agents of business acceleration and profit generation. CEOs pay a hefty price when they have legal staff respond to "what is" instead of imagining "what if." Let's do the math.
Global Fortune 500 revenue in 2020 was $33.3 trillion. At current benchmarks of legal spend as a percentage of revenue (just under 1%), that means that every year the Global Fortune 500 enterprises spend in the realm of $320 billion on legal departments. Research shows that digitally transforming the legal department can conservatively reduce costs by 15-20% (that is more than $60 billion of value to return annually); and when combined with the opportunity for gains in the categories of performance/quality enhancement, revenue augmentation, risk reduction, and digital business synergy, the total value capture impact significantly outpaces a pure function of legal spend. At current P/E ratios, that could well exceed $1 trillion of equity value.
|X Marks the Spot: 4 Areas of Opportunity to Facilitate Free Cash Flow
CEOs seeking to optimize enterprise performance and value need General Counsel who are eager to reduce costs, promote revenue growth and ease of business. Neglecting to think about Legal's ability to create value across its various domains shortchanges the business, collectively costing the Global Fortune 500 to forgo trillions of dollars in value. To unleash the opportunity that may be driven by the legal department, CEOs need to expand their mindsets about GCs and see them as more than gatekeepers, but as gateways to driving business in the digital age. Taking a much more expansive view of Legal's potential will augment free cash flow in the following four areas:
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Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
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David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
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Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
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