Core competencies revisited and surveyed

A scattering of posts discuss the general notion of core competencies as applied to law departments (See my posts of May 14, 2005: Bain’s survey of management tools and June 9, 2007: a more recent Bain survey.). A couple offer specific instances (See my posts of Sept. 21, 2005: a brand company’s legal focus; Feb. 8, 2006: British real property; and March 13, 2006: Philip Morris.).

What hasn’t been done is to define fully what the term “core competency” means (See my posts of March 15, 2006: descriptions of core competencies; July 31, 2006: core competencies are non-rival goods; and Aug. 9, 2006: some peripheral thoughts.).

Fundamentally; the notion is that when limited resources face unlimited requests for assistance, law departments ought to focus on a subset of services and do them very well (See my post of Aug. 5, 2007: clash between core-competency and full-service.). Law departments should not strive to be full-service shops. General counsel might agree with that proposition, but they ought to ponder four possible definitions internal-legal core competencies.

(1) “A core competence is something that you do better than anyone else.” That definition comes from Edward Russell-Walling, 50 Management ideas you really need to know (Quercus 2007) at 37. What can a law department do better than anyone else, especially a competent law firm? Inside lawyers can know the intersection between the law and business opportunities. That definition sets the bar too high.

(2) Competencies are those few areas of law that most directly and specifically support the company’s distinctive strengths. For consumer products companies legal support for marketing and sales are core competencies. Those practices areas demand the most from law departments and also depend on the most intimate knowledge of the client company. Legal work peripheral to the strategic posture of the client might as well flow to outside counsel.

For technology companies, patent law is core; for companies that sell to the government, federal or state contracting prowess is crucial; for heavily regulated utilities and insurance companies, regulatory procedures. Is antitrust “core” to every market-dominant firm? Such links seem too facile. Large companies, those over a billion dollars in revenue, are not so legally monolithic and simplistic, I believe.

(3) A third definition of legal core competency is what your lawyers do most. All law departments spend substantial time on contracts, they cope with human resources issues, resolve litigation, keep the legal trains running on time. Why aren’t bread and butter solutions to legal agreements and employee disputes every law department’s core competencies (See my post of March 17, 2006: virtually identical mission statements.)?

(4) Finally, why not privilege intimate knowledge of the business as a core competency or for that matter delivery of practical advice in comprehensible style? Competencies focused on legal concepts and applications are by no means the only deserved focal points for a law department.

Definitions aside, or maybe because the definitions cover so much ground, it may be that the idea of core competencies for in-house lawyers hasn’t much traction (See my posts of Aug. 13, 2006 and Oct. 10, 2006 on the whether the concept is sensible; and June 4, 2007: another illusive management concept.).

In any event we have four possible perspectives on core competencies: excellence, client alignment, frequency of services, and business acumen. Each definition leads to potentially different selections of what services to focus on.

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