“Legal is just a cost center.”
“The business drives the revenue; legal puts the brakes on us.”
“In-house lawyers should focus on preventing loss to the company.”
These statements, often heard about in-house legal departments, have sometimes been used to minimize the role of the in-house lawyer or to suggest that other departments of a company should be viewed with more importance by the C-suite. But to quote Don Draper and the brilliant writers of one of my favorite shows, Mad Men: “If you don’t like what’s being said, change the conversation.” This series of blog posts is going to explore one of the ways that you, as in-house legal counsel, can change that conversation, and through that change, alter the perception of the role of in-house counsel at your company and strengthen the relationships that you have with your business unit clients.
Revenue recovery is the way you can make that change in the conversation. Let me explain what I mean by revenue recovery by first stating what it is not. Revenue recovery does not mean that your in-house legal department will start offering its services outside of the company, effectively taking on external clients (although, interestingly, a couple of corporations in Europe are actually doing just that). Revenue recovery also does not mean that your company suddenly will start filing lawsuits left and right and the in-house legal department essentially will become a full-time plaintiff’s firm (although, again, there may be occasions where your company will identify and choose to pursue legitimate claims as a result of these efforts).
Rather, revenue recovery refers to a structured process through which in-house counsel, in conjunction with their business unit clients, examine your company’s agreements, operations and deals to identify legitimate claims and recoveries that already exist.
You, as in-house legal counsel, can change that conversation, and through that change, alter the perception of the role of in-house counsel at your company and strengthen the relationships that you have with your business unit clients.
The objective is for your company to preserve and protect its rights and interests. It is also to ensure that your vendors, suppliers, purchasers, joint venturers and other business partners are following the terms of your carefully negotiated agreements, delivering the products and inputs in the quantity and quality required, and otherwise performing their obligations. An obvious example of this is collecting royalties for licensed intellectual property. But a less obvious example is the recovery of incentives that may have been provided to buyers of your products that never made the required amount of purchases.
With this framework in mind, you can apply a simple description to this process: as in-house counsel, you are working to recover revenue that rightfully belongs to your clients.
In future postings, I am going to explore with you some details on why and how to start a revenue recovery program, sources of revenue recovery, the resources you will need to create and operate a successful revenue recovery program, overcoming obstacles you may encounter along the way, and some real life examples of how your in-house peers have used these kinds of programs to recover tens of millions of dollars.
I am excited to share with you these ideas to change the dynamic of the relationship between in-house counsel and your business unit clients because this approach offers a whole new way to create value for your clients. And I hope that you will share with me your ideas, questions, or comments (even if to tell me that you think my ideas are crazy) in the blog feedback form at the bottom of this post. I also welcome your feedback and suggestions on topics for future posts.