Ten Things: Legal Operations – What In-House Lawyers Need to Know

If there is nirvana for in-house lawyers it is the following: delivering high-quality legal services at lower cost and with better results.  The search for this legal “Eldorado” has gone on for decades with mixed results.  Typically, you can solve part of the equation but only at the cost of other parts.  For example, you can get lower costs but not always higher (or even the same) quality as provided by more expensive firms or systems.  Moreover, given their workload and other priorities (i.e., legal work), it’s rare that the search for a solution to this conundrum becomes an imperative for in-house counsel.  Still, the alluring value of solving the puzzle means that there is tremendous value waiting to be unlocked if and when a solution becomes available.  Over the past few years, hope has appeared in the form of legal operations, a discipline that focuses on the “unique” idea of treating in-house legal departments like any other part of the business.  Along with data analytics (which I discussed in my last post) and legal procurement, legal operations helps form part of the “Big Three” best practices utilized by savvy legal departments of any size.  This edition of “Ten Things” walks you through what you need to know about how legal operations can help in-house lawyers increase efficiency, lower costs, and deliver better results:

1.  What is Legal Operations?  The legal operations group consists of a person (or persons) and typically sits within the legal function of a company.  The group 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, an in-house legal operations team mimics those of outside law firms, who for decades have benefited from separating the lawyers from the day-to-day operation of the 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.   Operations – in the in-house context – is a broad term and can mean many different things.  Most legal operations groups focus on financial matters because that is where the biggest benefit lies, i.e., getting the legal department on a firm financial footing with accurate forecasting and accruals of legal spending and identifying the right firm for the right project at the right price.  But, that is not all that they do or can do.  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 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, 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.

2.  What is the goal of Legal Operations?  The easy way to describe the goal of legal operations is as follows: take on all of 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, you immediately see the value of a legal operations function – 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).  Likewise, when in-house lawyers have time to focus on legal problems and not administrative problems, performance improves as more legal work gets does with more thought and attention, and with less need for outside counsel.  That is a huge positive.  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, i.e., 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.  All-in-all, a virtuous cycle.

3. How can Legal Operations enhance efficiency?  This is the heart of the matter: what can legal operations do to enhance efficiency in your legal department?  The most straight-forward way to answer this is to break things out into several categories and identify specific tasks under each where the legal operations group can help to drive efficiency.  Here is my non-exhaustive list:

• Strategic Planning
  • Partner with the General Counsel and assist with driving her/his vision
  • Create Legal KPI’s and yearly goals for the department
  • Succession planning
  • Create a “three-year plan” (or other strategic plans) for the legal department
  • Prepare materials for the General Counsel to use during yearly reviews of their and the legal department’s performance
• Financial Planning
  • Prepare and set budgets
  • Operate e-Billing system
  • Accruals
  • Spending forecasting
  • Negotiate (and monitor) alternative fee arrangements
  • Manage outside counsel and other legal vendors (including outside counsel guidelines)
  • Financial reporting (within the legal department and outside the legal department)
  • Create legal department dashboards
• Operational/Analytics
  • Staffing
  • Data analytics and metrics
  • Find process improvements (including how to “scale” legal services delivery to meet the growing needs of the company)
  • Continuing Legal Education (CLE)/Professional development
  • Attorney licensing
  • Contract management
  • E-Discovery
  • Pro Bono program management
  • Knowledge management
  • Records management
  • Manage intern program
  • Determine legal process improvements
  • Plan legal department meetings, including off-sites and other activities
  • Regulatory compliance
  • Legal project management
  • Create Board of Directors presentations
  • Satisfaction surveys (business clients, internal to the department)
• Technology
  • Vet, test, and implement new technologies (and train individuals on how to use the various technologies used by the department)
  • Maintain technology used by the department

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.

4.  Who do you hire for the role? While many legal operations professionals are lawyers with in-house experience, they do not need to be.  Someone with a strong financial background, MBA or CPA, would likely make an excellent choice.  In the end, all you really need is someone who is smart, self-motivated, good with numbers, at ease with technology, and a leader.  That’s a big group of people.  The Corporate Legal Operations Consortium (CLOC) has identified 12 core competencies that make up a legal operations function.   The ACC Legal Operations group has identified 14 areas.  The 12 and 14 consist of/overlap with many of the items above in No. 3 but also include areas like cross-functional alignment, service delivery, and communications.  These competencies will form the required skills for your operations staff.  Of course, there are many other skills that make for a great legal operations hire, and near the top is the ability to be (or quickly become) extremely knowledgeable about the business of the company (as that knowledge will be critical for analytics and prioritizing the work of the legal department).

5.  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 and jumping on “crazy new things” is just not the way of most of them behave, especially in an environment where mistakes can reflect poorly on them and the legal team regardless of the often mouthed assurances from senior management that failure is welcomed within the company as a “learning experience.”  That’s rarely how it really works.  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?  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, another lawyer?  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 serious 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?” Finally, and perhaps the biggest obstacle is the lack of willingness by the general counsel to let go of many of these operational tasks, a feeling that if the GC is not “in charge” of operating the legal department then they are somehow failing.  Delegation is, and will likely always be, the general counsel’s hardest task with legal operations being their ultimate delegation challenge. So, you might ask, why take the risk?  Because of the payoff in cost savings and efficiency.  And understanding that much of this angst arises from a lack of understanding of what the operations person or team will do and how their work will resonate positively throughout the legal department and ultimately throughout the company.

6.  Make the case to management.  It is critical to “make the case” to the CFO and CEO as to why a legal operations role is needed, how it can improve the delivery of legal services, and – most importantly – how it can pay for itself over a short timeframe due to generating cost savings, cost avoidance, and increased technology adoption (e.g., most departments see at least a 5% – 7% reduction in spending by adding or enhancing a legal operations function).  Even small legal departments can benefit from a legal operations role – even if you don’t dedicate someone full time to the role, 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 for having such a role shouldn’t apply to the legal department – 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.  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.  That said, you should be able to put together a cost savings case that shows the role will pay for itself.

7.  Where do they report?  While most legal operations team report directly to the general counsel, there are cases where that is not the case.  Some sit under the Finance team or within a “center of excellence.”  Be agnostic.  Regardless of where the function reports, the legal department will reap the benefits as will the company.  The team will likely physically sit with the legal team or spend significant time with the legal department anyway.  The key is developing a great working relationship and a high level of trust with whoever sits in the operations role regardless of whether they report into Legal or elsewhere.

8.  Integrate them into your team.  If you are fortunate enough to have a legal operations person or team (or are on the cusp on getting one), don’t waste this opportunity.  One thing I recall from attending a lot of staff meetings of business executives is that they all started with data and the insights that data gave the leaders.  Why would Legal not want the same capabilities?  That said, it takes a big commitment on the part of the general counsel and everyone else to extract the maximum value of a legal operations person or group.  This means including the head of operations in all legal department planning and strategy meetings, budget updates, goal/KPI planning, and so forth.  Make sure they feel valued and wanted.  At a minimum, they will bring a fresh perspective to issues that you previously looked at with more of a “legal” lens than a operations one.  If there is resistance from your team, remember to point out that the goal is to start taking non-legal problems and projects out of the hands of the lawyers so the lawyers can focus their limited time on legal issues.  That alone will drive efficiency, cost savings, and a happy bunch of lawyers.

9.  Go for easy wins.  If you just starting out with legal operations, don’t feel like you need to go straight to calculus.  Some basic algebra is just fine when getting your feet wet.  In other words, find the easy wins to get things started and to prove the value of the operations role.  For example, implementing e-signature technology or e-billing, budget tracking and metrics, basic vendor management, enhanced invoice review, knowledge capture, or even just simple work-flow processing improvement that can pay off big with minimal resources expended.  Your goal should be to go back to the CEO and/or CFO at six-months and one year later and present your results.  The odds are good that they will like what they hear if you focus on the easy stuff first.

10.  Resources.  If you think that a legal operations group could help your legal department or want to learn more, here are some resources to get the process underway:

• Read the materials on the CLOC and ACC Legal Operations websites. Membership is inexpensive and, even if you’re not a member, there are many free resources available to help you get started.
• Check out LegalOps.com, a site dedicated to legal operations (and sign up for the free newsletter).
• SimpleLegal’s Legal Operations 101: a Blueprint for Modern Legal Departments  is a must have.
• Get the ACC’s Legal Operations: Leading Practices in Implementing Strategy, Leading Change, and Advancing Law Department Excellence
• Read Five Articles to Understand how Legal Operations Can Help Lawyers Get Back to the Law

There is a growing body of work on the impact of legal operations and the value it can provide.  Just do a general browser search for “legal operations” and you’ll get a lot of information fast.  There are also plenty of consultants ready, willing, and able to help you with developing or enhancing your legal operations function.  Whether that makes sense depends a lot on your budget and your tolerance for consultants.  I think a lot of the basics and easy first steps can be done by the General Counsel and members of her team.  But, when you get ready for the more sophisticated uses a consultant may make sense.

  *****

Legal operations are not just for mega-size legal departments.  The math varies but somewhere between 25% to 50% of in-house legal departments (of all sizes) have created legal operations functions but that number is only going to grow – here in the US and internationally.  All in-house legal teams should take a hard look at whether a legal operations function (or process) would improve service and reduce costs.  It’s difficult to believe that it will not.  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 legal department desk. The effort and cost is worth it.

Sterling Miller

April 17, 2019

I am pleased to announce that, after the successful sale of Marketo, Inc. to Adobe late last year, I have rejoined Hilgers Graben PLLC as Senior Counsel.  I am based in their Dallas office.  My law firm email is smiller@hilgersgraben.com.  Reach out if you need anything.

Follow me on Twitter @10ThingsLegal and LinkedIn where I post articles and stories of interest to in-house counsel frequently.  

“Ten Things” is not legal advice nor legal opinion and represents my views only.  It is intended to provide practical tips and references to the busy in-house practitioner and other readers.  If you have questions or comments, please contact me at sterling.miller@sbcglobal.net.

I have three published books: Ten Things You Need to Know as In-House Counsel – Practical Advice and Successful Strategies, The Evolution of Professional Football, and The Slow-Cooker Savant.  I am also available for speaking engagements, coaching, and consulting.