Someone once asked me this question: “If you have one hire to make in an in-house legal department, who would it be?” I answered if I only had one, it would be a contracts lawyer. But I quickly added that if I had two the second would be a legal operations professional. Why? Because if my goal is to deliver high-quality legal services at lower cost and with better results, setting up a legal operations function is the fastest and best way to reach the goal. Below we discuss what “legal operations” is, its goals, the value it provides, and how to go about setting up such a function in your legal department.
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| What is legal operations? |
| What is the goal? |
| How can legal operations enhance efficiency? |
| What stands in the way? |
| How do I sell this to the business? |
| What do I do next? |
What is legal operations?
The legal operations group consists of a person (or persons) and typically sits within the legal function of a company. It usually reports directly to the general counsel and is responsible for the “operations” of the legal department, ultimately looking to maximize the efficient delivery of legal services throughout the company. In many ways, the function mimics those of outside law firms, which for decades have benefited from separating the lawyers from the day-to-day operation of the law firm. For example, generally, you don’t see partners at law firms working on technology implementations or setting up the billing process. They care about these issues and are involved as needed, but their skills and time are saved for a higher and better use – practicing law. The same concept applies in-house.
Legal operations is a broad term and can mean many different things to an in-house legal department. Most legal operations teams focus on financial matters because that is where the biggest benefit lies, like accurate forecasting and accruals of legal spending and identifying the right firm for the right project at the right price. But there are many tasks that the operations group can perform. Smart general counsel realize this and – if lucky enough to have an operations person or group – use the team to (as discussed below) the fullest extent possible, from financial analysis to strategic planning to data analytics. In many legal departments, the head of legal operations also acts as chief of staff. As such, many heads of legal operations have the ear of the general counsel and are power players within those legal organizations.
What is the goal?
The easy way to describe the goal of legal operations is as follows: take on all the tasks that do not require a law degree and free up in-house lawyers to focus on legal work. By taking non-legal tasks off the plates of in-house lawyers, the value of the legal operations function crystalizes; it frees up time for lawyers to be lawyers, thereby enhancing, among other things, the quality of work-life (which in turn helps with retention). When in-house lawyers have time to focus on legal problems and not administrative problems, performance improves as more legal work gets done with more thought and attention, and with less need for outside counsel. On a more granular level, a legal operations team focuses on things that drive efficiency within the legal department by allowing the legal team to operate based on data and not guesses. Driving efficiency in any business is all about metrics. Efficiency also arises when the work of the legal operations team allows the legal team to “do more with less” turning what is usually a budget-time slogan into reality. The efficiency enhancements in the legal department, in turn, tie directly to a company’s primary goal of driving profitability.
How can legal operations enhance efficiency?
To better understand how a legal operations function enhances efficiency, let’s break things out into several categories and identify specific tasks under each category that the legal operations group can perform to drive efficiency. Here is a non-exhaustive list:
- Strategic: Working directly with general counsel to assist in driving his or her vision. This could include creating yearly goals and KPIs, managing succession planning, and developing strategic plans to guide department operations.
- Financial: Managing department finances through budgets, e-Billing systems, forecasting, alternative fee arrangements, reporting, and other details related to the bottom line. This allows for more direct management and keeps GC and associate focus on legal issues.
- Operational: This is one of the biggest bangs for your legal operations bucks, taking many disparate tasks off the plate of legal staff while keeping the department running smoothly. In this realm, a legal operations unit could focus on things like:
o Staffing
o Data analytics and metrics
o Attorney licensing
o Contract management
o Program, knowledge, and records management
o Plan legal department meetings, including off-sites and other activities
o Regulatory compliance
o Vet, test, and implement new technologies (and train individuals on how to use the various technologies used by the department), including generative AI adoption.
All of these are currently tasks managed by lawyers or paralegals. Moving them to an operations professional will mean better results and more time for lawyers and paralegals to do high-value legal work.
What stands in the way?
One hurdle to creating a legal operations role within a legal department is the conservative nature of lawyers. Most in-house lawyers prefer the status quo and jumping on “new things” is just not the way most of them behave. Additional challenges arise from the simple economics of creating such a role or group. Where does the budget come from and is this the best way to allocate scarce resources? There is also skepticism about the value of legal operations – does the math really work out? What if my department is small – will I get the same value from legal operations as a mega-sized department? Another roadblock is the age-old question of, “Where do I find the time to work on setting up legal operations when I cannot get to all of the work I already have on my plate?” The biggest obstacle? The lack of willingness by the general counsel to let go of many of these operational tasks, a feeling that if they are not “in charge” of operating the legal department they are somehow failing. Delegation is, and will likely always be, the general counsel’s hardest task, with legal operations being the ultimate delegation challenge. The counter to all of these reasons not to implement a legal operations function is simple – the pay off in terms of efficiency, productivity, and economic savings.
How do I sell this to the business?
This all sounds great in theory, but how do I sell it to the business? It is critical to “make the case” to the CFO and CEO as to:
(1) why a legal operations role is needed
(2) how it can improve the delivery of legal services, and
(3) how it can pay for itself over a short timeframe due to generating cost savings, cost avoidance, and increased technology adoption.
Small legal departments can also benefit from a legal operations role – even if the person is not full time, the principles work regardless of the size of the department. Also, if other parts of the business have an operations person/team, there is no reason why the same logic shouldn’t apply to the legal department, i.e., you can’t expect the legal department to operate like a part of the business but short-change it on the same tools the other parts of the business utilize. Regardless, for the most part, your ability to convince the decision makers that the role is warranted will depend on numbers. Don’t skimp on the “make the case” part as you’ll likely get one shot to get agreement with the executive team. Marshall all your data and best facts together when you make the pitch. You should be able to put together cases for time savings and cost savings that show the how the role will pay for itself over time.
What do I do next?
If you think a legal operations group could help your department, there are several steps you can take to get the process underway:
- Read materials from the Corporate Legal Operations Consortium (“CLOC”) and ACC Legal Operations. Membership is inexpensive and many resources are available even if you’re not a member. Another good resource is LegalOps.com, a site dedicated to legal operations. Likewise, the Thomson Reuters Legal Operations Index is another must read for legal operations professional and in-house lawyers.
- Prepare to make the case to business leadership on why a legal operations role is needed. Be prepared to show how it can improve the delivery of legal services, and how it can pay for itself.
- Get the budget and create a blueprint for your legal operations function both short and long term.
- Find the right person to run it. They do not have to be a lawyer, though that helps. They should have a solid background in finance (CPA or MBA) and be comfortable with technology.
- Find easy wins to get started and to prove value. For example, implementing e-signature technology or e-billing, vendor management, enhanced invoice review, knowledge capture, just simple workflow processing improvement can pay off big with minimal effort.
All in-house legal teams should take a hard look at whether a legal operations function would improve service and reduce costs, no matter the size of the department. Keep an open mind and do your homework. If you have access to Practical Law, you have access to a wide variety of legal operations resources to help you get started.
