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Six disadvantages of a decentralized system where local business leaders hire lawyers as they see fit

In Inside Counsel, June 2009 at 54, Peter Wexler explains why he changed the decentralized structure at Schneider Electric to one where its practicing lawyers all report to him. The department has 90 lawyers, in 31 locations in 23 countries (See my post of April 25, 2009: more about Wexler.).

  1. “The hiring often was done without a full understanding of what skills and experience were needed.” Non-lawyers may be less able to discern appropriate legal talent or know what to pay them.

  2. “The new lawyers were not exposed to corporate training and lacked an internal network for sharing advice (See my post of July 13, 2009: train foreign lawyers at headquarters.).

  3. “There was no way to leverage the legal expertise that existed across business units.” Not infrequently, business units and the lawyers that serve them seal themselves off from the rest of the company (See my post of Nov. 6, 2006: organizational network analysis finds brokers who bridge silos; Dec. 10, 2007: use knowledge management resources to counter silos; March 22, 2006: six solutions to silos; Jan. 30, 2006: cross-functional teams at Independence Blue Cross; March 28, 2006: PPG’s efforts to break down silos; July 25, 2007: decentralized reporting breeds silos; March 1, 2007: risks of compartmentalized legal practices; Feb. 9, 2008: silos in structure and operations; Jan. 8, 2008: limits career progression; Sept. 21, 2008: one of seven obstacles to talent management; and Feb. 1, 2009: project teams attenuate silos.).

  4. “There was no system for escalating legal problems to upper management.”

  5. “There was no way for Wexler to control quality.”

  6. “The system was not efficient. For example, one business division had an in-house legal staff in Italy, but another division doing business in Italy didn’t know that, and hired outside counsel to handle its legal work in the country.”

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One response to “Six disadvantages of a decentralized system where local business leaders hire lawyers as they see fit”

  1. The Schneider Electric experience appears analagous to the “crises” growing companies experience.
    Over time, the informality of the entrepreneur moves to dysfunctionality necessitating his/her replacement with a centralising management team. That in turn become claustrophobic to many necessitating, again over time, the introduction of greater delegation/empowerment of management functions and so on.
    In the Schneider example, the “think global act local” approach appears to have swung too far and is now being redressed. The challenge will now be to ensure local managers do not feel disenfranchised etc and to identify an equilibrium (is that ever possible?) between central control for value protection and local authority to ensure the legal function remains relevant, utilised and value-enhancing.