Harnessing Operational Excellence: A Path to Enhanced Legal Department Services in the Energy and Utilities Sector

E&U companies are under increasing pressure to keep their rate structures down while delivering the highest levels of performance. They also struggle to balance the interests of consumers, regulators, shareholders and other stakeholders with the need to position their business for the future and invest in infrastructure, advanced technology like artificial intelligence (AI), and sustainability initiatives.

Increasing operational efficiency, optimising business processes and eliminating waste inside the organisation can go a long way toward helping E&U firms lower their costs of providing services without forsaking their plans for the future. And by operating more efficiently, these companies will be in a better position to help justify a rate increase to regulators when the time comes to institute one. Greater efficiency can also help them to enhance the margin out of approved rates.

While the legal organisation may not be the first function that pops to mind when E&U businesses are looking to reduce costs, it should be high on their list. Like many areas in a company, legal departments are often ripe with opportunities to enhance efficiencies and drive a streamlined process to deliver standout service. However, this opportunity is often overlooked or simply not prioritised because:

• Existing legal processes are so entrenched that no one thinks about doing them differently. That’s especially true if the processes are working — even if the path required to achieve desired results isn’t efficient or cost-effective.
• There is resistance to change due to the perception that letting go of long-standing approaches could somehow “break” how the legal function operates and put critical work at risk.
• Legal departments in E&U companies are constantly in fire-drill mode. So, even if leadership is motivated to improve how the function operates, there is little opportunity to step back and consider what “better” could look like, let alone try to make it happen.

Despite these challenges and concerns, preserving the status quo in legal functions won’t help E&U companies to elevate overall efficiency and reduce costs. Meanwhile, the window of time to make fundamental changes to legal processes that can drive a competitive advantage is narrowing. Regulatory pressures and other demands are ratcheting up. That means legal teams need to be ready to bring their A-game, which includes having the right processes and technology in place.

Energy and utilities executives who responded to Protiviti’s latest Top Risks Survey said they expect their industry to become even more highly regulated over the next decade. In fact, they cited “heightened regulatory changes and scrutiny” as the number one risk for 2034. (That risk ranks second for 2024.) E&U executives also see expanding sustainability- and climate-related disclosure requirements as a top five risk for their business in 2034. In short, legal functions in the E&U space are going to be busy.

Proactively Assess the Potential Impacts of Change to Kick-Start Optimisation Efforts

E&U businesses that commit to optimising their legal functions should know that even small changes in how basic processes are handled can deliver big returns. Implementing AI-powered tools, for example, can help streamline and automate tasks. Teams can speed their review of legal documents and expedite research while increasing overall efficiency, agility and accuracy. The use of AI may also inspire them to develop new and creative ways to deliver legal services.

There is a caveat here. While technology can be a transformative force for optimisation, it will never fix a broken process. This is why it is critical to conduct a thorough impact assessment to understand where the application of technology in the legal function is needed to drive change in processes, and what tool is best, whether it’s legal project management software, a document automation tool, or generative AI.

As part of the impact assessment, consider the potential ripple effect that changes in the legal function might have on the broader business. For instance, while your legal team might benefit from the implementation of a brand-new contracts management system, letting go of the current solution might have a negative impact on your sales organisation and its processes.

The use of alternative legal services for routine contracts management and compliance tasks is another strategy to help optimise the legal function and increase cost-efficiency. It allows your core legal staff to focus on what they do best, requiring them to step in only when an issue demands their expertise.

Helping Legal Teams Operate More Effectively While Positioning for the Future

E&U businesses that want to optimise their legal department can look to third-party consultants to help them holistically review how their function currently operates. These resources can help conduct the impact assessment to determine what processes can be improved, added or eliminated — and what technology tools can enhance the legal team’s work. They can also illuminate how AI can help the legal function deliver services more efficiently, the potential risks of AI and how to manage them, and more.

Protiviti’s Legal Consulting practice offers a multidisciplinary approach and tailored blend of alternative legal capabilities across legal advisory, technology, industry, managed solutions and talent management. Learn more about our capabilities and services, including for contracts management, here.