4 Ways to Turn Legal From a Cost Center to a Revenue Generator
A client once shared that every time she picks up the phone to call legal, or sends off an email, she calculates in her head what that call will take out of her operating costs. Knowing that legal services are a necessity in a growing company, it’s hard for many executives to swallow the enormous cost that comes with the protection from risk that good legal will afford.
You know, it doesn’t have to be that way.
Legal CAN help your business grow, becoming part of your revenue machine as opposed to lighter fluid to your cash. Here are 4 ways to turn legal from a cost to part of your growth.
Look for industry expertise
Many law firms and in-house GCs will specialize in business transactions, M&A, and business litigation. And the fact is, that’s still a broad brush with which to paint. If you’re a high-growth tech company in scale mode, you need a partner that works with other high-growth tech companies in scale mode.
Why this helps with growth: Your lawyer has the benefit of understanding the unique challenges and opportunities of business just like yours. When they review your contracts, they’re not simply scanning for potential risks (which, at an excess, can be unnecessary and extra-costly. More on that later), they’re also looking for ways those contracts can improve your business outcomes as they’ve done for similar clients. You get the benefit of tribal knowledge and a lawyer who’s more like a business advisor with very specific expertise.
Minimize risk without recreating wheels
Lawyers are trained to minimize risk. This is, afterall, why businesses spend so much on legal services. When your lawyer works with hundreds of clients across multiple industries, they’re inherently looking for every possible risk with every single transaction.
If you’re an early stage Ed Tech company with $10M in revenue, then risks that apply to a $100M supply chain company don’t necessarily apply to you. Unfortunately, your contracts will be redlined with those unnecessary risks in mind. This equates to a high-cost legal transaction with changes or suggestions that are truly not applicable to your business.
If your lawyer specializes in working with companies like yours, that means they’re not going to recreate wheels.
Why this helps with your growth: They’re more likely to use templates that work as a baseline for all of their clients and modify/build from there. They’re also far less likely to redline contracts to the point that you have to go back to the drawing board. This means less time is spent on changing documents and more time spent on turning those documents into vehicles to advance your business. And because they’re an expert in your type of company (if you’ve followed tip #1), they’ll be able to minimize your risk in a really efficient way, taking lessons learned from working with other companies like yours.
This is intelligent use of resources at its best.
Look through the lense of the business, not the lense of the court
This goes back to tip #1, and having an expert legal partner who acts more like an advisor. This lawyer looks at every legal transaction, every contract, every conflict, as an opportunity for business growth.
Let’s use the sales contract as an example. This is usually the final piece standing between your business and a potential customer. It’s absolutely in your interest to have a sales contract that promotes fast and effortless approval. The more your prospective customer reviews, cuts up, and negotiates that contract, the longer your sales cycle and the longer you have to wait for that revenue.
Why this helps with your growth: Your legal partner is absolutely required to mitigate your risk. And they can absolutely do this while not delaying sales or worse, cause a sale to go south due to an unnecessarily marked up contract. The average transactional lawyer is thinking about how a judge would interpret the contract. An expert business partner-lawyer, who thinks about the business impact of their work, is thinking about how a customer would interpret the contract, and marrying that perspective with language that protects your business. They’re goal is revenue from good customers, just like yours.
Automation; Technology; and Internal Resources
A legal partner that is hyper-focused on growth as opposed to generating enough revenue to cover impossibly high overhead, looks for more efficient ways to solve problems for companies. This includes:
- Process automation in the contract cycle
- Utilizing technology, such as equity management software, document management, contract review, CRM, etc.
- Utilizing resources already existing in your company for basic tasks such as annual report filing and 1099 agreements
The intelligent use of resources means that we use processes to automate contract creation, as an example, and proactively address possible legal issues across departments. This minimizes spend with outside law firms (we’ve talked about how expensive that is) and shifts the relationship between growth-stage company and outside legal. It also means utilizing technology and the resources that already exist in your company (in the finance, product, and HR departments, as examples) to assist the outsourced GC in recurring legal and business ops tasks.
Why this helps with your growth: Automating processes in the contract cycle allows contracts to be created, move through the revenue process, and ultimately, be signed by the customer more expediently. Utilizing technology and existing company resources saves money and creates calculated ROI when hiring an outsourced General Counsel. We implement technology and automated processes to save businesses tens of thousands of dollars from spend on paralegals and associates.