What is Legal Operations?

Legal operations encompasses all the legal department’s responsibilities that are not the law itself. This includes spend management, efficiency and productivity, communication, vendor management, technology, change management, and data analysis. The most specific definition on offer is from the Corporate Legal Operations Consortium (CLOC), which umbrellas legal operations over 12 competencies that every legal function should aspire to have at three maturity levels; you can find this resource on their website.

Typical roles and responsibilities of legal operations include:

  • Defining and driving initiatives to improve efficiency and process workflows
  • Managing outside counsel guidelines, legal spend (visibility, control, and reduction) and department budget
  • Optimizing law firm performance for maximum value for money
  • Implementing, measuring, and analyzing metrics that inform decision-making, turning them into actions that deliver improvements
  • Implementing technology to achieve these goals
  • Working cross-functionally to demonstrate the legal department’s value within the organization to the business
  • Effectively executing these functions to produce benefits that improve the productivity and profitability of the legal department, allowing the team to demonstrate their value to the business
  • Helping to shape focus areas for the department and defining areas for short- and long-term improvement.
  • Introducing metrics and KPIs for measuring and benchmarking these focus areas.
  • Deploying dedicated legal operations resources undistracted by the practice of law to focus on raising the profile of Legal and its value to the business.
  • Building stronger, data-driven, transparent relationships with external providers to maximize value
  • Building more strategic partnerships with outside counsel and service providers.
  • Standardization and automation of repetitive or administrative tasks such as invoice review so that the team can spend more time on high-value work.
  • Encouraging consistent use of technology and processes across the team and integrating with systems in the broader business for company-wide strategic analytics.
  • Influencing data-driven staffing, matter resourcing and other decisions.

The function has been around longer than you might realize. CLOC, for example, was formed in the USA back in 2010. In our survey of legal departments, the Legal Operations Benchmarking Report, only 2% of departments were not focusing on legal operations at some level.

So, what’s driving the recent prevalence of the legal operations function? In the 1980s and earlier, corporate legal departments were almost entirely focused on risk and compliance and advising the business. The legal function was the cost of doing business. Over time, business has become more complex, regulated, and global. With that, demand for legal services (and therefore costs) has increased, with increased pressure to control these costs and complexities. Organizations now expect the legal department to manage budgets and efficiencies like other departments.

General Counsel are under more pressure than ever to justify their legal costs and improve the efficiency of their department. With this demand to make the legal department act more “like a business” comes a need for cost control and process improvement. The challenge for a traditional legal team is that the skills needed to do this effectively are separate from a standard lawyer’s repertoire. This has led to the need and rapid spread of legal operations-specific technology, processes, and people.

Options are available for legal departments that need to cover legal operations responsibilities. They can upskill existing legal team members, bring in commercial managers from elsewhere to manage the legal operations, use consultants, or hire an experienced legal operations manager from outside.

An effective legal operations manager combines knowledge of the practice of law, an understanding of the business and its challenges, and commercial skills. Besides the technical skills of change management, commercials, data analysis and technology, a successful legal operations manager can navigate the business and manage multiple stakeholders. As a support function, if the manager is unaware of the challenges, they will not be able to solve them. They should also demonstrate a proven track record of transformation, efficiency, and cost control initiatives.

For example, a lawyer moving into this role may need upskilling in data and technology. A business manager moving into this role will need upskilling in managing law firms and the legal industry. All the necessary skills are essential throughout the team, even if they are not the legal operations manager. Don’t split the team into lawyers and non-lawyers but have the whole team working together operationally towards common goals. Identify where your skills gaps are and look to address these when hiring the legal operations manager.

Even in teams with no legal operations manager, the responsibilities of legal operations are still getting done – even if they don’t have the “legal operations” name. Around 44% of the Legal Operations Benchmarking Report respondents have legal operations tasks assigned to one or more individuals not solely dedicated to the legal operations function. In this case, ensure there is someone in the business who oversees the responsibility, usually the General Counsel. If the skills exist throughout the team and there is an individual responsible for the strategy, your legal department can achieve operational goals without a dedicated manager.

You may, however, need to introduce non-lawyers into the team if the change, technology, data, and commercial skills are otherwise lacking. We do advocate hiring a dedicated resource to manage legal operations. Without a dedicated resource, operations will take a back seat to the practice of advising the business, especially during busy or under-resourced periods. A dedicated manager ensures operational goals get the focus and attention they need.

In today’s business world, the combination of skilled personnel and software fuels goals such as transparency, efficiency gains and data analysis. Legal Operations is no exception, proven by glancing at the world’s leading legal operations teams. No one among them does not rely on legal operations tools in their daily work.

Some of the applications and benefits of technology include:

  • Creating workflows for repetitive tasks automates manual processes and improves productivity
  • Real-time dashboards on matter or contract statuses give visibility to stakeholders
  • Legal e-billing ensures law firms adhere to billing guidelines which saves money and time
  • Organizations can compare law firm prices and performance for more transparent and fair reviews and negotiations
  • Knowledge management tools make it easier to collaborate, search and find information and documents
  • Consistent data creates reports and analytical capabilities to enable decision making

Our Legal Operations Benchmarking Report found a high correlation between legal operations maturity and the breadth of legal technology used. Whether the results compare country, industry, or company size, the result is the same; there is a correlation between mature legal operations and technology usage. Using technology to assist in achieving goals means greater success, which leads to growing legal operations departments and more advanced capabilities and goals. But a warning: legal as a department is typically behind the curve when it comes to digitalization, and although the benefits of legal technology are apparent, adoption and change management issues can slow down your route to success. Look for experience in this area when building your team.

E-billing, legal spend, and matter management are solutions often implemented for legal operations because it’s easy to achieve a fast ROI. As many of the benefits are directly related to cost savings, the solution soon pays for itself. For example, automatic enforcement of billing guidelines spots errors a human invoice reviewer can miss, generating considerable savings in the first year of software usage. Real-time cost transparency, such as Onit’s European legal spend management solution BusyLamp eBilling.Space‘s Work in Progress tracker, removes surprises when the invoice arrives and allows for more accurate budgeting.

In addition, matter and spend management solutions deliver many efficiency and collaboration benefits, such as:

  • Invoice processing is automated, faster than a human reviewer, reduces manual errors, and frees up lawyers to do more valuable and engaging work.
  • Reports and dashboards are generated automatically or built quickly, using a centralized database of matter and spend information. No more hours and days wasted compiling information from multiple sources of on and offline data. They also improve the visibility of actual and upcoming spend and flag high-risk matters.
  • Centralized matter and documents improve collaboration internally and with law firms and enable fact-based negotiations and reviews.
  • The data generated by using technology can be analyzed and used to make strategic decisions to further improve legal operations and Legal’s value to the business.

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