Forward-thinking: Planning ahead for unlikely scenarios

Whether it’s exercising more, losing weight, getting organized, or learning a new skill, continuous improvement and progress are always unlocked faster when we start with a plan and set some clear goals. It’s no different for in-house legal departments: the start of the next financial quarter is a great time to organize, set goals, and — most importantly — strategically plan for the unexpected.

Planning ahead is an opportunity for legal departments to show their added value to the company, to look forward, peer around corners to try and spot future issues, and engage in scenario planning for dealing with these. Having a structure in place designed to spot issues, rank them using a matrix, and plan accordingly can make this process easier for in-house lawyers.

Gather your information

Your ability to strategically plan for the unexpected starts with a willingness to gather the necessary information. Given the speed and volume of information available, this may seem hopeless. The key is to focus on useful sources of information, such as data about your company and the marketplace, as well as the customers, regulators, competitors, or environmental factors that could influence the company’s business. 

• Start early. Don’t wait until there’s an issue to begin the process. It should be a constantly evolving system where team members always digest information and decide whether it should go on the “watch list.” Assigning roles can be part of everyone’s development process. 
• Collaborate. Your best source of information for potential issues is often your organization’s business leaders. So, talk to them! Make appointments to spend 30 to 60 minutes to discuss what they see as potential issues over the next 12 months or so and — equally important — which sources of information they follow to stay informed about developments that might affect their part of the business. 
• Do your research. Gather company strategy documents and public filings, read major newspapers, and subscribe to market publications focusing on your company’s lines of business. Legal-specific sources of information that track critical developments or highlight new and important issues are also useful. 
• Keep a record. Create a storage system for the information so that you can go back and reference what you already know next January. The storage can be as simple as an email folder or spreadsheet — whatever works best for you.

Build a framework

Once you’ve gathered all the necessary information, you’ll need a framework to sort through it all — risk analysis of what you have gathered can help determine which issues are worth spending more time on.

No legal team has the time or resources to mitigate every possible risk, so your team will need to decide which issues will likely materialize in the next 12 months. Using a two-by-two matrix — also known as the Eisenhower matrix — where the horizontal axis (x) is the likelihood of happening, and the vertical axis (y) is the impact on the company can be helpful. While simple, an Eisenhower matrix is incredibly effective for identifying where to focus your energy.

While no one can predict the future with 100% accuracy, having a systematic way of looking at and focusing on potential problems is prudent. When it comes to which questions to ask, there’s a lot of information online focused on critical thinking. Still, I like to reduce it to the most basic question: would this increase or decrease company value? If the answer is neither, it doesn’t make the list. If it triggers one or the other, it simply becomes “by how much?” The bigger the impact, good or bad, the more likely it should be on your list.

Remember, this does not have to be a solo endeavor. You can run the matrix past others in the department — and the business leaders you spoke with — and use their input to refine your thinking. 

Make a plan

Finally, once you’ve gathered and sorted through the information, asked the right questions, and plotted the key issues on your matrix, you need to develop your scenario planning for what the legal department will do if any of these issues arise. As noted, you should focus on the issues in the upper-right quadrant, but if time and resources permit, you can give some attention to the other quadrants. While some like to make scenario planning complicated, I prefer to keep it simple. My approach is generally, “who, what, why, where, and when?” In other words:

• Who do I need to loop in? 
• What do we need to do? 
• Why do we need to do it? 
• Where will we need to act? 
• When do we need to act? 

Preparing for contingencies like these can all be part of developing your legal department’s business action plan.

Be prepared

In-house lawyers are busy, and it’s not easy to carve out time to think about what might be. However, taking the time to do so could mean the difference between being a reactive or proactive legal team and could also play a vital part in getting your legal department ready for the future. While a reactive team can usually get by, a proactive one is an incredibly valuable asset to any business. A proactive team engages in the same type of planning the business undertakes, loops in crucial stakeholders, gets different opinions and viewpoints, and takes steps to prepare for the unexpected. 

So, plan ahead and show the business the value the legal department brings to your organization. Fortunately, for those legal teams with access to Practice Law, you’ll have a wealth of resources to help you spot and track critical developments that could affect your company.