How To: Integrate Your Legal Department with the Business

What started out as a budgetary concern became a communication overhaul at plywood and lumber company, Louisiana–Pacific (LP). General counsel, vice president, and corporate secretary Mark Fuchs details how his bottom-line observation made his department integral in cost-containment, planning, strategy, and ultimately, a more effective partner for the entire business.

Identify the Problem
I can’t say that I set out to rectify anything specific in terms of establishing communications between legal and the rest of the company. My relationship with the company started as the litigation manager, and I realized we were spending a lot of money on litigation, and as general counsel, I realized legal was not being used as well. We were not acting as a sophisticated user of legal services, and I wanted to change that. The communication improved as we demonstrated how participation at a business level could benefit the individual businesses and the company.

Change the Mind-set
We were no different than other legal departments. After events were cemented, we’d be asked “Hey, can you document this?” or “We’re in trouble. Let’s litigate this.” I wanted legal to move into a more strategic role. It is hard to get business people to invite a lawyer to any meeting, so to get those invites, we focused on cost avoidance and savings. As a commodity-based business, lowering costs got attention. Litigation was the biggest spend in legal, so how do you lower those costs? The answer—no surprise—was to lower your cost per case in addition to lowering your caseload. We proved our value to the businesses by asking what is causing this litigation. The type of case is still a factor, but we could almost always pinpoint a time where legal intervention could have prevented litigation.

Find the Source
Litigation was a huge cost for the legal department, internally and externally. People in our facilities were getting hurt, almost always contractors hired to build, tear down, or improve something, and that didn’t make sense. Safety is a core value at LP, and we take employee safety and well-being very seriously. All US businesses measure employee safety by OSHA’s TIR (Total Incident Rate), and LP’s TIR has decreased considerably since the company made safety a core value. Our safety managers were meeting, and I asked to be on the agenda. I asked them “How are we protecting employees but not contractors?’ And I got a simple reply: “We were told that we can’t control the details of our contractors’ work or else we will get sued when they get hurt.” I asked, “Who told you that?” and the response was a nonspecific, “Legal.” We were getting sued anyway, so I said, “Well, I’m legal, and I’m telling you to control the details of their work.” The safety team put together a program that had an immediate impact on litigation costs. We went from having a premises liability lawsuit nearly every month to having fewer than five since 2003. Our safety team created and continues to implement programs to improve safety for anyone entering our mills.

Ask more Questions
We’ve done the same thing in nearly every other area of our business, whether it is eliminating litigation, avoiding risk by being part of contract negotiations or in divestitures or acquisitions. Our goal is to be at meetings where things are getting done, to ask or answer questions, and to provide access to a lawyer, and being at the table really puts you outside of the traditional roles. We’re involved in business negotiations and considering business opportunities, which is ultimately, sitting at the table as the businesses are strategically planning what they are going to do in the next five to 10 years.