Here, we shine our spotlight on legal operations as a growing function within an in-house legal department. We examine what it’s for, why it exists and how it can contribute to a successful legal function.
The modern in-house legal function is a complex place. Lawyers’ workloads are heavier and more complex than ever, yet legal departments are under more pressure than ever to justify their costs. A good legal operations manager can put efficiency processes in place and manage departmental costs, freeing up lawyers to concentrate on legal work.
Why legal operations?
How times have changed.
If you’ve been working as an in-house lawyer for any length of time, you’ve probably seen your role, and the wider in-house function, change beyond recognition.
Once upon a time, we were all about risk management. We dealt with a handful of complex legal issues and, where necessary, brought in external counsel to provide specialist advice.
Around the mid 1990s that began to change. The volume of complex work started to increase as organisations spread their wings and went international while industry-specific legislation grew more demanding. Along with that came increased use of external counsel – and increased scrutiny of costs.
In the last fifteen years, we’ve seen another shift. Legal operations have become even more complex, while many in-house legal departments have added the role of trusted business advisor to their offering.
What hasn’t changed, of course, is that costs are still tightly controlled, so the use of external counsel has become more strategic.
In-house legal functions are responding to their new challenges through people [Link: Making the case for extra resource] and technology [Link: 7 examples of GCs using technology].
However, simply managing costs and departmental priorities takes up a lot of time – currently much of it lawyers’ time. And in some cases specialist expertise.
Enter legal operations.
What are the benefits of legal operations?
Legal operations, as a function within the in-house legal team, can relieve lawyers of time-consuming non-legal duties. It can improve the performance of the department, both operationally and financially by:
- Creating tools that demonstrate the value of legal across the wider organisation;
- Highlighting how the legal department spends its money and forecasting future budgetary needs;
- Building on relationships with external counsel and other vendors to ‘get more for less’; and
- Aligning the legal function’s tools with those used across the whole organisation. This can make the department’s reports and data more valuable in business and strategic planning.
What does legal operations look like?
In its document, A Primer on Legal Operations, Corporate Legal Operations Consortium (CLOC) sets out 12 core competencies that make up a comprehensive legal operations offering.
However, not all in-house legal functions need to provide all 12 from the outset. The competencies are spread over three stages of an organisation’s development:
- Foundational level;
- Advanced level; and
- Mature level.
The four competencies a legal operations function should provide to an organisation in its foundational stages are:
- Financial management. Managing the legal budget and working closely with the finance department to track accruals, enhance forecasting and identify ways to reduce spending. Key benefit: More streamlined budgetary control allows legal to demonstrate that it can operate in a business-like way and in line with the rest of the organisation;
- Vendor management. This is about taking responsibility for dealings with external counsel and other providers. Legal operations handles fee negotiations, regular reviews and quality assurance. Key benefit: Reduces costs and improves the quality of externally sourced support;
- Cross-functional alignment. Building relationships with other departments across the organisation and representing the legal function at relevant networking events. Key benefit: Enhances the legal team’s standing, both internally and externally; and
- Technology and process support. Building the legal team’s long term IT strategy in support of matter management, board management, e-billing, contract management, compliance management and more. Key benefit: Central responsibility for the legal function’s technology reduces costs while ensuring lawyers have the tools they need to work effectively and seamlessly together.
As the organisation evolves, so too should its legal function - and the operations team that supports it. The four new competencies to consider adding now are:
- Service delivery and alternative support models. This widens the support options to include more resources as and when they may be needed. For example, managed services, legal service outsourcing (LPO) and new technology. Key benefit: Maintains focus on efficiency and budgetary control;
- Organisational design, support and management. Helping the legal team create a culture that promotes personal development, collaboration and accountability. Key benefit: Develops people, the single most important asset in any team;
- Communications. Sharing information, insights and learnings so as to ensure consistency across project management [Link: Legal project management], onboarding and other global processes. Publishing and implementing the legal function’s communications plan. Key benefit: Helps the legal team operate as a single unit, however many locations it has and wherever they are; and
- Data analytics. Gathering and analysing data and market intelligence from internal and external sources. Key benefit: Equips the legal team to make the best possible decisions and provide the best-informed advice.
The mature stage of the organisation’s development is where legal operations should make its offering fully comprehensive by adding:
- Litigation support and IP management. Supporting the legal team in litigation matters by taking care of e-discovery and document review. Similarly, handling operational tasks in intellectual property matters. Key benefit: Reduces costs and improves efficiency in areas that directly affect the organisation’s business;
- Knowledge management. Defining approaches and tactics to help the legal team share knowledge, increase learning and drive innovation. See also Knowledge management tools and processes [Link: Knowledge management tools and processes]. Key benefit: Minimises duplication of effort and maximises the value of existing knowledge across the legal function;
- Information governance and records management. Developing systems, policies and processes for managing and retaining records. Key benefit: Reduces the organisation’s risk and brings leadership to a vital but often deprioritised duty; and
- Strategic planning. Developing the legal function’s long term strategy, complete with annual targets and a system to measure progress. Key benefit: Keeps the legal function fully aligned with the wider organisation’s strategic goals.
As the in-house legal function has evolved to take on complex projects and act as a trusted business advisor, its processes, polices and costs have become important issues. Most lawyers have neither the time nor the skill set to manage the operational side of the modern legal function and this is where legal operations, as a function, comes in. Using the CLOC approach to legal operations, this function can start with four essential competencies and add to them as the organisation grows and evolves. When the organisation is mature the legal operations function should aim to provide the full suite of 12 core competencies to support the in-house legal team.To read the next article titled 'Planning for success - six steps in developing a business plan for legal' click here.