Legal operations: change how your law department works

If there is nirvana for in-house lawyers, it is delivering high quality legal services at lower cost and with better results. Typically, you can solve part of the equation but only at the expense of other parts. Over the past few years, hope has appeared in the form of legal operations, a discipline focused on the “unique” idea of treating in-house legal departments just like any other part of the business. Along with data analytics and legal procurement, legal operations forms part of the Big Three best practices increasingly utilized by savvy legal departments of any size. This article explains how legal operations can help in-house lawyers increase efficiency, lower costs, and deliver better results.

What is legal operations?

The legal operations group varies in size and typically sits within the legal function of a company. The group 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, an in-house legal operations team mimics the operations teams utilized by outside law firms, which for decades have benefited from separating their lawyers from the day-to-day operation of the firm. For example, generally, you don’t see partners at law firms working on technology implementation or setting up the billing process.

Legal operations is the same idea and, in the in-house context, is a broad term. Most legal operations groups focus on financial matters because this is where an immediate benefit can be seen. But, there are many operational tasks this group can perform. Smart general counsels realize this and use the team fully, from financial analysis to strategic planning to data analytics. In many legal departments the head of legal operations acts as a chief of staff, a role existing in many C-Suite offices already but one that has been slow to develop for general counsel. 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 of legal operations?

The easy way to describe the goal of legal operations is to take on all tasks not requiring a law degree, freeing up in-house lawyers to focus on legal work. On a more granular level, a legal operations team focuses on tasks driving efficiency within the legal department with a goal of allowing the legal team to operate based on a data and not guesses. 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 legal operations enhances efficiency, 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

There are seemingly endless ways in which a legal operations function can make a legal department more efficient. If you add up the time spent per month by in-house lawyers on the tasks identified above, the math becomes clear – there are huge efficiencies and cost savings available for the taking by any size legal department willing to make the investment.

What stands in the way?

One big hurdle for creating a legal operations role within a legal department is the naturally conservative nature of lawyers. Most in-house lawyers prefer the status quo. Additional challenges arise from the simple economics of creating such role or group. Where does the budget come from and is this the best way to allocate scarce resources? And if there is money for an operations role, is that the best way for the legal department to spend those dollars as opposed to, say, adding another lawyer?

There is also skepticism about the value of legal operations. Much of this angst arises from a lack of understanding of what the legal operations person or team will do and how their work will resonate through the legal department and, ultimately, throughout the company.

Other roadblocks include the time it takes to set up the legal operations motion, as well as wariness on the part of the General Counsel to delegate operational tasks at the risk of appearing out of sync with department operations.

What can you 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 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.
• 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. If other parts of the business have an operations person/team, there is no reason why the same logic for having such a role shouldn’t apply to the legal department. Don’t skimp on the “make the case” part as you’ll likely get one shot to get agreement. 
• Be agnostic as to where the function sits.  While most sit within the legal department, some sit under the finance team or within a center of excellence. Regardless of where the function sits, the department will reap the benefits as will the company.
• Get the budget and create a blueprint for your legal operations function both short and long term. 
• Find the right person to run the show.  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 work flow processing improvement can pay off big with minimal effort.

The math varies, but somewhere between 25% to 50% of in-house legal departments (of all sizes) have already created legal operations functions. All in-house legal teams should take a hard look at whether such a function would improve service and reduce costs, no matter the size of the department. Keep an open mind and do your homework. Legal departments can be like a messy desk, functional but not optimal.  A clean desk is both.  It may be time to clean your desk.