Starting a legal department from scratch can be a challenging but rewarding task, particularly for legal counsels who prefer an in-house environment with a business-oriented approach. Through my journey, I found my preference for the in-house environment, which provides a more business-focused approach to legal matters. From my past experience, I’ve realised that launching a legal function - especially as a sole counsel - requires more than legal expertise: it demands strategic thinking, adaptability, and a deep understanding of the business.
This article aims to provide practical insights for legal counsels establishing a legal department from scratch - whether for a startup or an established organisation. I will share key learnings and recommendations based on my own experience.
The first and most crucial step when creating a legal department is to fully comprehend the company’s business model, industry, and strategic objectives. From my experience, truly understanding the business isn’t just about knowing what the company does, but understanding how it does it, and why it does it that way. This understanding will shape your legal department’s priorities and ensure that it aligns with the company’s overarching goals. It’s easy to assume that you’ve grasped everything after a few meetings, but there’s always more beneath the surface. The most valuable insights often come from observing how different departments work in practice, rather than just reading reports.
Once you understand the business, you need to establish a clear mission for the legal department. It’s important to remember that a legal department’s value is not just in risk mitigation but in enabling business growth. I’ve found that defining the mission early on is crucial but so is revisiting it regularly. The landscape, both internal and external, changes, and your department’s objectives must be flexible enough to adapt.
This will provide the team with a clear sense of direction and ensure that the legal function is aligned with the broader goals of the organisation.
Conducting a legal risk assessment isn’t just about ticking boxes; it’s an ongoing process that requires constant vigilance and an openness to adapting to new risks as they arise. For instance, a simple GDPR compliance checklist will not suffice in the long run, especially with the fast-evolving nature of data protection laws. A risk assessment should never be static; it should serve as a living document that evolves alongside the business.
Efficiency in legal processes is paramount, but note that it shouldn’t come at the expense of accuracy or thoroughness. I’ve always believed that the real test of an efficient legal department is how well it can juggle speed and quality, and it’s not easy to achieve. Standardising processes, such as contract reviews, seems simple on paper, but it can sometimes lead to complacency, where the “default” becomes the norm. Try to balance process with flexibility, particularly when it comes to drafting contracts or compliance strategies.
The importance of a good contract management system can’t be overstated. In my experience, this is where many legal departments can be caught off guard, especially if contracts are stored poorly or are difficult to track. A centralised repository is invaluable, but it’s crucial not to just rely on the technology alone. The human aspect is just as important, ensuring that everyone knows how to use the system and is properly trained. Also, don’t underestimate the importance of constant feedback loops in this area. Systems that seem efficient at first can become uneasy as the business scales. Regularly reviewing your contract management system is essential.
The legal department often finds itself isolated from other teams, particularly in organisations where legal is still viewed as a “back-office” function. However, I’ve seen how critical it is to break down these silos. You’ll need to work on how to position yourself as a trusted advisor, not just a compliance officer, to pre-emptively address legal issues before they escalate.
To do so, you’ll need to establish strong relationships with other departments and proactively participate in cross-functional meetings, collaborate on projects, and provide legal guidance from the early stages of business initiatives. This approach will promote a proactive legal culture and facilitate better decision-making, minimising legal risks.
Regularly communicate legal updates, changes in regulations, and notable legal developments to the wider organisation. Conduct training sessions for employees to raise awareness of legal risks and compliance obligations specific to their roles. This proactive approach will empower employees to make informed decisions and foster a culture of compliance.
It can be very valuable for your organisation to promote regular compliance training sessions for employees, highlighting the importance of ethical business practices and relevant legal obligations. This leads to increased awareness and a decrease in potential compliance violations.
Personally, I think that budgeting for a legal department is often the most difficult part of the process. It’s challenging to demonstrate the value of legal support in purely financial terms, especially when some legal functions are seen as cost centres.
Ensure that your legal department’s budget aligns with the company’s financial goals. Prioritise resources based on identified legal needs, such as hiring additional team members, external counsel or alternative legal service providers, investing in legal technology, or outsourcing certain tasks.
The ability to adapt is perhaps the most critical lesson I’ve learned in building a legal department. A legal function cannot thrive on rigidity. It must be flexible enough to respond to regulatory changes, business shifts, and technological advancements. For instance, the rise of AI in legal research and document review can make your job more efficient, but it requires constant adaptation to new tools and methods. Building a department from scratch is a monumental task, but flexibility, adaptability, and continuous learning are what allow it to flourish in the long term.
Embrace the opportunity to create a legal department tailored to your organisation’s unique needs, and you will play a vital role in safeguarding its growth and success.
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