What is Legal Operations?
Legal Operations Software
Broadly speaking, legal operations is all the responsibilities of a legal department that aren’t law itself. Spend management, efficiency and productivity, communication, vendor management, technology, change management and data analysis. Perhaps 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 (https://cloc.org/).
Function and Benefits of Legal Operations
- Typical roles and responsibilities of legal operations include:
- Define and drive initiatives to improve efficiency and process workflows
- Manage outside counsel guidelines, legal spend (visibility, control and reduction) and department budget
- Optimise law firm performance for maximum value for money
- Implement, measure and analyse metrics that inform decision making, turning them into actions that deliver improvements
- Implement technology to achieve these goals
- Work cross functionally to demonstrate the legal department’s value within the organisation to the business
Effective execution of these functions produce benefits that improve the productivity and profitability of the legal department, allowing the team to demonstrate their value to the business:
- Legal operations helps shape focus areas for the department and defines areas for short- and long-term improvement.
- Introduction of metrics and KPIs allows for measuring and benchmarking these focus areas.
- The department has dedicated legal operations resources who are undistracted by the practice of law so can focus on raising the profile of legal and its value to the business.
- Stronger, data-driven, transparent relationships with external providers to maximise value and build more strategic partnerships with outside counsel and service providers.
- Standardisation and automation of repetitive or administrative tasks, such as invoice review, so the team can spend more time on high value work.
- Consistent use of technology and processes across the team, but also that integrate with systems in the wider business for company-wide strategic analytics.
- Data-driven staffing, matter resourcing and other decisions.
The Rise of Legal Operations
Legal operations currently carries so much buzz you’d be forgiven for thinking it’s new, but the function has been around longer than you might realise. 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 focussing 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 focussed on risk and compliance, and advising the business. The legal function was a cost of doing business. Over time, business has become more complex, more regulated, and more global. With that, demand for legal services (and therefore costs) have increased and with it, pressure to control these costs and complexities. Now, the legal department is expected to manage budgets and efficiencies like others departments already do. 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 not necessarily part of a standard lawyer’s repertoire. This has led to the need and rapid spread of legal operations-specific technology, processes, and people.
How to staff the Legal Operations Function
There are a few options available for legal departments that need to cover legal operations responsibilities; they can upskill existing legal team members, bring in commercial managers from elsewhere in the business to manage the legal operations, use consultants, or hire an experienced legal operations manager from outside.
What to look for in a Legal Operations Manager
An effective legal operations manager combines knowledge of the practice of law, an understanding of the business and it’s challenges, and commercial skills. Besides the technical skills of change management, commercials, data analysis and technology, a successful legal operations manager will be able to successfully navigate the business and manage multiple stakeholders. As a support function, if the manager is unaware of the challenges, they won’t be able to solve them. They should also be able to demonstrate a proven track record of transformation, efficiency and cost control initiatives. A lawyer moving into this role may need upskilling in data and technology for example. A business manager moving into this role will need upskilling in managing law firms and the legal industry. The important thing is to have all the necessary skills throughout the team, even if they are not in the legal operations manager themselves. 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.
How legal operations functions without a legal operations manager
Even in teams with no legal operations manager, the responsibilities of legal operations are still being done – even if they are not called so. 44% of respondents in the Legal Operations Benchmarking Report have legal operations tasks assigned to one or more individuals who are not solely dedicated to the legal operations function. In this case, ensure there is someone in the business who is responsible for overseeing the responsibility, this is usually the General Counsel. As long as 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 however 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.
Using Legal Operations Software to Improve Performance
In today’s business world, goals such as transparency, efficiency gains and data analysis are achieved through the combination of skilled personnel and software. “Legal Operations” is no exception to this and this is proven by a glance at the world’s leading legal operations teams. There is not one among them who 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 eBilling ensures law firms adhere to billing guidelines which saves money
- Law firm price and performance can be compared 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
In our Legal Operations Benchmarking Report , we found a high correlation between legal operations maturity and breadth of legal technology being used. Whether slicing the results to compare by country, industry, or company size, the result is the same; mature legal operations and legal technology usage are correlated. 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 digitalisation, and although the benefits of legal technology are obvious, adoption and change management issues can slow down your route to success. Look for experience in this area when building your team.
Using Legal Operations Systems for e-Billing, Spend & Matter Management
e-Billing and legal spend and matter management are solutions often implemented for legal operations because it’s easy to achieve a fast ROI. As so many of the benefits are directly related to cost savings, the solution soon pays for itself. Some of these include:
- Automatic enforcement of billing guidelines spots errors a human invoice reviewer can miss, generating huge savings in the first year of software usage.
- Real time cost transparency, such as BusyLamp Work In Progress tracker, removes surprises when the invoice arrives and allows for more accurate budgeting throughout the matter.
In addition, matter and spend management solutions deliver many efficiency and collaboration benefits, such as:
- Invoice processing is automated which is faster than a human reviewer, reduces manual errors, while also freeing up lawyers to do more valuable and interesting work.
- Reports and dashboards are generated automatically, or built easily, using a centralised 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 visibility of actual and upcoming spend, and flag high risk matters.
- Centralised matter and documents improves collaboration internally and with law firms, and enables fact-based negotiations and reviews.
- The data generated by using technology can be analysed and used to make strategic decisions to further improve legal operations and legal’s value to the business.